RBI launch first pilot of Digital Rupee. What should retail users know?

India’s first Digital Rupee pilot project will commence today. The Reserve Bank of India (RBI) will launch the pilot for a central-bank-backed digital rupee for the wholesale segment today, November 1. “…the first pilot in the Digital Rupee – Wholesale segment shall commence on November 1, 2022,” the RBI said in a statement on ‘Operationalisation of Central Bank Digital Currency-Wholesale (e ₹-W) Pilot’.

It also announced that the first pilot in Digital Rupee – Retail segment is planned for launch within a month in select locations in closed user groups comprising customers and merchants.

Experts believe that CBDC is one of the biggest developments in the financial world, the full impact of which will be visible in near future. India already has a stellar record as an early adopter of technology with the rapid adoption of UPI and QR-based payments across the country. With CBDC, it is expected that India will take giant strides in the world rapidly progressing towards the adoption of digital currencies.

RBI has not yet launched a Digital Rupee pilot for the retail segment. The central bank will launch the first pilot of the Digital Rupee for the retail segment within a month. It will be launched for closed user groups comprising customers and merchants. RBI will share details in this regard soon.

The current rollout of the Digital Rupee is meant for the Wholesale segment only. According to RBI, the use of the Digital Rupee in the wholesale segment would make the interbank market more efficient. Moreover, the settlement in central bank money would reduce transaction costs by preempting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk.

In future, RBI plans to launch pilot projects for other wholesale transactions and cross-border payments.

9 banks identified for participation in digital rupee’s wholesale pilot

The nine banks are State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC, the RBI said in a release.