Digital currency, Digital rupee, Digital cash, Money, Banking, Business, Technology
Digital currency, Digital rupee, Digital cash, Money, Banking, Business, Technology

- Reserve Bank of India has initiated the wholesale CBDC (Central Bank Digital Currency) pilot for the call money market and is testing the market to evaluate use cases, RBI Executive Director Ajay Kumar Choudhary said.

”It is pilot to test the system and accounting,” he said, adding that I might not be right to comment on volumes at the moment.

“We are looking at different wholesale use cases and will accordingly look at how to proceed, Choudhary said at the sidelines of the ASSOCHAM’s Banking and NBFC Summit.

Earlier in September, Choudhary had said that the RBI is testing wholesale CBDC for the inter-bank (call money) borrowing and the pilot is expected to start by October.

The pilot is believed to have been introduced via the nine banks already part of the g-sec pilot--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.

Retail CBDC

RBI had launched the wholesale CBDC pilot for settlement in the secondary government securities market in November 2022, and later the retail CBDC pilot for P2P and P2M transactions in December 2022.

On progress in the retail CBDC target of touching 10 lakh transactions per day by December 2023, Choudhary said that the central bank is working on putting all the building blocks in place to ensure the pace of transactions picks up.

“Multiple things are there, interoperability etc, we are looking at it. Once all those blocks are in place, possibly that will help in picking up the pace,” he said, adding that RBI expects volumes to start picking up in Oct-Nov from the current run rate of 18,000-20,000 transactions a day.

He added that the objective of the pilot is to test the behaviourial pattern of users, which will accordingly impact design choices and decisions on policy framework and incentives within CBDC’s goal of facilitating financial transactions without putting any individual system at risk.

Public tech platform

The public tech platform for friction less credit, launched by the central bank August 17 2023, is seeing great response from lenders and will help with cost optimisation and improving turnaround time for sanction and loan disbursals.

As of September 29, lenders have disbursed over 70,000 loans worth ₹1,400 crore via the public tech platform, he said.

Asked about the roll out of the proposed guidelines for fintech companies and on self-regulatory organisations (SROs), Choudhary said that fintech regulations are likely to take some time but the SRO norms will be introduced this year.

 “Everything has to be done in a phased manner. We don’t want to go for Fintech regulations immediately but the SRO mechanism is likely to come within this year,” he said.

RBI has on October 6 announced that it will issue an omnibus framework for recognising SROs for various regulated entities.