The Reserve Bank of India, the pilot for the wholesale use of the digital rupee will start on Tuesday. The trial would involve using the digital rupee to settle secondary trades in government securities, which should improve the efficiency of the interbank market. Settlement in central bank money would lower transaction costs by avoiding the requirement for infrastructure to provide settlement guarantees or for collateral to reduce settlement risk on October 7, the Central Bank announced that it would start pilot launches of the digital rupee for particular use cases, starting with use cases in the wholesale sector.
A concept note from the RBI stated that the “e-rupee” will provide a digital option to the currently accepted modes of payment that is likely to be simpler, quicker, and less expensive. It further stated that nine banks, including 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, had been identified to take part in the trial. According to the RBI, the first digital rupee pilot for the retail sector (eR) is planned to start in a month in a few select areas with closed user groups.