The Reserve Bank of India on Monday announced that it will launch its digital rupee on November 1 as a pilot project for transactions in the wholesale market. The digital rupee will be used to settle inter-bank transactions of bonds issued by the government, the RBI said in a statement.
The digital currency is equivalent to the banknote but will be issued in electronic form.
The Reserve Bank of India said that nine banks – 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 – will be part of the pilot project.
“Going forward, other wholesale transactions, and cross-border payments will be the focus of future pilots, based on the learnings from this pilot,” the central bank added.
It also said that a pilot of the digital rupee for the retail market would be launched within a month in among a closed group of customers and merchants.
On October 7, the Reserve Bank of India had said it was exploring the pros and cons of the digital rupee for some time and is working towards a strategy to implement it in a phased manner.
On February 1, Union Finance Minister Nirmala Sitharaman had announced in the annual Budget speech that the Reserve Bank of India will introduce a digital rupee during the course of the financial year.
“Introduction of a central bank digital currency will give a big boost to the digital economy,” Sitharaman had said in her speech. “Digital currency will also lead to a more efficient and cheaper currency management system.”