The Reserve Bank of India (RBI) is all set to launch India’s first Digital Rupee, on the 1st of November, Tuesday.
The Indian Bank would release the digital currency as a pilot project, which commenced from Tuesday, with nine banks. The banks which would have digital currency as a pilot would include the State Bank of India (SBI,) HDFC Bank and ICICI Bank, issuing virtual currency for transactions in government securities. The other banks selected for the pilot project are: the Bank of Baroda, Union Bank of India, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC.
“…the first pilot in the Digital Rupee – Wholesale segment shall commence on November 1, 2022,” said the RBI said in a statement. The statement further said, “Use of e?-W is expected to make the inter-bank market more efficient.”
With this digital currency launch, settlement in central bank money would reduce transaction costs by pre empting the need for settlement guarantee infrastructure or mitigate settlement risk.
The Reserve Bank of India (RBI) said the Central Bank Digital Currency (CBDC) is aimed to complement the current forms of money and is envisaged to provide an additional payment avenue to users. However, the launch of new digital currency would not replace the existing payment systems and would be an add on to the existing payment modes.
As of now, the RBI would launch CBDC for wholesale institutes, whereas for retail (which would be used by all) the CBDC would be launched after a month in selected locations as pilot project.
Notably, the Government of India earlier announced the launch of the Digital Rupee from the fiscal year 2022-23 onwards in the Union Budget.
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