The Reserve Bank of India will commence a pilot for a wholesale central bank digital currency on Nov. 1.
A total of nine banks have been enlisted to participate in the pilot, according to a statement from the central bank. These includes State Bank of India, HDFC Bank Ltd., ICICI Bank Ltd., Yes Bank Ltd., Kotak Mahindra Bank Ltd. and HSBC, among others.
"The use case for this pilot is settlement of secondary market transactions in government securities," the central bank said. Labeled "e₹-W", the wholesale CBDC is expected to add efficiency to transactions in the inter-bank market.
"Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk," the RBI said. Other wholesale transactions and cross-border payments will be the focus of wholesale CBDC pilots in the furture.
The first pilot for the RBI's retail CBDC, called "e₹-R", is planned for launch "within a month in select locations in closed user groups comprising customers and merchants", the central bank said.
The RBI had in October outlined aspects of its approach to CBDCs in a concept note which showed that the central bank's inclination was to issue a digital currency for both retail and wholesale use cases.
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