MC Newsbreak confirmed | RBI starts wholesale digital rupee pilot in call money market

Reserve Bank of India (RBI) Executive Director Ajay Kumar Choudhary said on October 19 that the volumes are not high as it is a test of the system, accounting and multiple things

Reserve Bank of India (RBI) Executive Director Ajay Kumar Choudhary said on October 19 that the central bank has started a wholesale pilot of Central Bank Digital Currency (CBDC) in the call money market.

“It (the wholesale pilot of CBDC) has started, but volumes are not pretty well (are not high) as it is a test of the system, accounting and multiple things, and the pilot is to test all those things,” Choudhary said on the sidelines of the Associated Chambers of Commerce and Industry of India' 18th Annual Summit & Awards, Banking & Financial Sector Lending Companies.

On October 12, Moneycontrol exclusively reported that the RBI had started a wholesale pilot of CBDC in the call money market.

The call money market is where banks borrow from or lend to each other for the short term, usually a day, at market-determined rates.

Sources told Moneycontrol that nine banks participating in the pilot were part of the wholesale pilot of government securities, which was launched on November 1, 2022, to settle secondary market transactions in government securities. The banks are 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.

On September 10, executive director Choudhary, speaking on the sidelines of the G20 Leaders' Summit in New Delhi said that the central bank would introduce the wholesale version of its CBDC, the Digital Rupee-Wholesale, in the call money market by October.

“We are going to start interbank borrowing in wholesale CBDC this month itself. Either this month (September) or next month (October). We are testing it. Once we are ready we will be able to start,” Choudhary had said.

Further, Choudhary said the retail CBDC front may start picking up soon. “Possibly it will start picking up by October end and November beginning. Festive season will also be helpful, but a number of blocks need to be put in place,” he added.

Choudhary said that the daily run rate at this point in time is 18,000-20,000 transactions.

“We are working towards one million a day in retail CBDC. We are working on all the blocks that need to be fitted and after that, we will see the pick-up,” he added.

E-rupees or digital rupees in wholesale and retail circulation stood at Rs 16.39 crore at the end of 2022-23, according to the RBI Handbook of Statistics on the Indian Economy – 2022-23.

The denomination of the e-rupee most in circulation is Rs 500 followed by Rs 200 and Rs 100, data showed.