India’s central bank has become much more serious about its digital rupee.
And bankers said on Wednesday the RBI is now calling for more lenders to take part in pilot programmes using the digital rupee in a bid to ramp up the number of transactions.
The news comes as the Bank of International Settlements (BIS) said on Monday a survey had found that nearly two dozen central banks across emerging and advanced economies are expected to have digital currencies in circulation by the end of the decade.
“Most central banks are exploring central bank digital currencies (CBDCs), and more than half of them are conducting concrete experiments or working on a pilot,” it said.
More banks seeking fintech partners
Currently, large state-owned and private lenders, including State Bank of India, Bank of Baroda, ICICI Bank, HDFC Bank, Kotak Mahindra Bank and Yes Bank, are among those participating in the pilot project.
“The RBI has asked smaller banks to either tie up with fintech players or develop their systems to start CBDC pilots this year,” the technology head of a state-owned bank, who attended the meeting with RBI officials on Tuesday, said.
“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 bankers did not wish to be named as they were not authorised to speak to the media.
Targeting 1m CBDC transactions a day
The RBI aims to reach a target of one million CBDC transactions per day by the end of this year, RBI deputy governor T Rabi Sankar said on Tuesday.
There were 1.3 million customers and 0.3 million merchants, who used CBDC as of June 2023, he said.
“By getting more banks to participate in the pilots, the RBI wants to see if there are any glitches in implementation and conduct pilots on a large user base,” said another banker with a state-owned bank.
“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 central bank has also asked smaller banks to seek feedback from those currently conducting the pilots, the bankers said.
The RBI did not immediately respond to an email seeking comment.
- Reuters with additional editing by Jim Pollard