RBI asks smaller banks to develop systems for digital currency pilot programme: Report

The Reserve Bank of India (RBI) is looking to expand the central bank digital currency (CBDC), or digital rupee pilot programme by involving smaller banks and increasing transactions, a report said.

Citing three bankers, news agency Reuters reported that the central bank has called on a wider set of lenders to participate in the digital rupee pilot.

A digital rupee is a digital form of currency (notes/ coins) issued by the RBI and it can be used in contactless transactions just like it is done via UPI apps. The digital currency will be distributed through intermediaries (banks).

Currently, large state-owned and private lenders such as State Bank of India, Bank of Baroda, ICICI Bank, HDFC Bank, Kotak Mahindra Bank and Yes Bank are participating in the pilot.

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“The RBI has asked smaller banks to either tie up with fintech players or develop their systems to start CBDC pilots this year,” the agency stated the technology head of a state-owned bank, who attended the meeting with RBI officials, as saying.

“We will now have to float tenders to get interested fintech partners on board and evaluate the costs involved. This process is expected to take about four-five months,” the person added.

How it will help digital currency implementation
According to a banker with a state-owned bank, by getting more banks to participate in the pilots, the RBI will be able to see if there are any glitches in implementation. It can then conduct pilots on a large user base.

“We are in the advanced stage of submitting a CBDC pilot request to the RBI. We expect the approval to come in the next one-two months,” the banker was quoted as saying.

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The smaller banks have also been asked to seek feedback from the current participants of the pilots.

RBI deputy governor T Rabi Sankar said earlier this week that the central bank aims to reach a target of one million CBDC transactions per day by the end of this year. According to Sankar, there were 1.3 million customers and 0.3 million merchants who used CBDC as of June 2023. The RBI began trials using CBDCs in both the wholesale and retail markets last year.

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The Reserve Bank of India (RBI) is looking to expand the central bank digital currency (CBDC), or digital rupee pilot programme by involving smaller banks and increasing transactions, a report said.

Citing three bankers, news agency Reuters reported that the central bank has called on a wider set of lenders to participate in the digital rupee pilot.

A digital rupee is a digital form of currency (notes/ coins) issued by the RBI and it can be used in contactless transactions just like it is done via UPI apps. The digital currency will be distributed through intermediaries (banks).

Currently, large state-owned and private lenders such as State Bank of India, Bank of Baroda, ICICI Bank, HDFC Bank, Kotak Mahindra Bank and Yes Bank are participating in the pilot.

Read Also

“The RBI has asked smaller banks to either tie up with fintech players or develop their systems to start CBDC pilots this year,” the agency stated the technology head of a state-owned bank, who attended the meeting with RBI officials, as saying.

“We will now have to float tenders to get interested fintech partners on board and evaluate the costs involved. This process is expected to take about four-five months,” the person added.

How it will help digital currency implementation
According to a banker with a state-owned bank, by getting more banks to participate in the pilots, the RBI will be able to see if there are any glitches in implementation. It can then conduct pilots on a large user base.

“We are in the advanced stage of submitting a CBDC pilot request to the RBI. We expect the approval to come in the next one-two months,” the banker was quoted as saying.

Read Also

The smaller banks have also been asked to seek feedback from the current participants of the pilots.

RBI deputy governor T Rabi Sankar said earlier this week that the central bank aims to reach a target of one million CBDC transactions per day by the end of this year. According to Sankar, there were 1.3 million customers and 0.3 million merchants who used CBDC as of June 2023. The RBI began trials using CBDCs in both the wholesale and retail markets last year.

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