The Reserve Bank of India (RBI), the country’s central bank, has chosen nine institutions to take part in the testing of the nation’s first digital rupee(e₹-W), which will begin on November 1.
The central bank announced on Monday that 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 will take part.
According to RBI, this pilot’s use case will involve the settlement of secondary market transactions involving government securities.
According to the RBI, the adoption of e₹-W is anticipated to increase the efficiency of the interbank market because settlement in central bank money would lower transaction costs by eliminating the requirement for infrastructure to provide settlement guarantees or for collateral to decrease settlement risk.
India Future pilot projects will concentrate on cross-border payments and other wholesale transactions.
Within a month, the first pilot for digital rupee in the retail sector (e₹-R) is scheduled to begin in a few select areas with limited user groups made up of customers and merchants.
Months after the RBI suggested changes to the Reserve Bank of India Act, 1934, to include digital currencies in the definition of “banknotes,” India’s Finance Minister Nirmala Sitharaman tasked the RBI with issuing a digital rupee based on blockchain in February.