Shaktikanta Das sees big potential in RBI digital currency, rupee trade

The Reserve Bank of India monetary policy committee (MPC) has raised policy repo rate by 35 basis points to 6.25 percent with immediate effect. RBI Governor Shaktikanta Das on December 7 announced that five out of six members of the MPC opted to go for a hike in the rate during the meeting. Here's what RBI Governor announced at MPC briefing.

Reserve Bank of India (RBI) Governor Shaktikanta Das on January 6 said that rupee settlement of cross-border trade and the Central Bank Digital Currency (CBDC) have big potential in the years to come.

Das was speaking at the launch of a book by the International Monetary Fund on South Asia.

“Rupee settlement of cross-border trade and Central Bank Digital Currency (CBDC) where the RBI has already started moving forward, can also be areas of greater cooperation in the future,” Das said.

Das during the launch also said that they are moving the trail phase of digital rupee very carefully and cautiously. This is because if there is cloning or anything which happens, it can be very risky.

On November 1, the RBI had commenced the first pilot in the Digital Rupee - Wholesale segment.

Also read: Wholesale CBDC a major transformation in the way business is done, says Das

They had identified nine banks, viz., 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 for participation in the pilot.

While, on November 29, the RBI announced it is starting the first pilot for the retail digital rupee on December 1.

The central bank has identified eight banks for the project which will happen in two phases.

The first began with four banks, State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank. They will offer the retail digital rupee in four cities — Mumbai, New Delhi, Bengaluru and Bhubaneswar.

The second phase will see four more banks joining the project, Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank. These banks will extend the pilot to nine more cities: Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.

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On rupee trade settlement, the central bank has already entered into an agreement with countries in South Asia for UPI payments.

“We are already in discussion with some of the countries in this region (South Asian countries) to facilitate rupee settlement of cross border trade in the South Asian region,” Das added.

The RBI on July 11, 2022 allowed trade settlements of India with other countries in the rupee.

"In order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports / imports in INR," RBI said in a press release in July.