By Siddhi Nayak
MUMBAI (Reuters) – The Reserve Bank of India (RBI) has called on a larger group of lenders to take part in pilot programs that leverage the central bank’s digital currency (CBDC) to boost transactions, three bankers said on Wednesday to Reuters.
Nearly two dozen central banks in emerging and advanced economies are expected to have digital currencies in circulation by the end of the decade, the Bank for International Settlements (BIS) said in a study published Monday.
Last year, the RBI began trials of CBDCs, called e-rupees, in both the wholesale and retail markets.
Currently, major state and private lenders including State Bank of India, Bank of Baroda, ICICI Bank, HDFC Bank, Kotak Mahindra Bank and Yes Bank are participating in the pilot project.
“The RBI has asked smaller banks to join fintech players or develop their systems to start CBDC pilots this year,” said the technology chief of a state-owned bank, who attended the meeting with RBI officials on Tuesday.
“We will now need to put out tenders to get interested fintech partners on board and evaluate costs. This process is expected to take about four to five months.”
The bankers declined to be named because they were not authorized to speak to the media.
The RBI is aiming 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 using CBDC as of June 2023, he said.
“By having more banks participate in the pilots, the RBI wants to see if there are any implementation issues and run pilots on a large user base,” said another banker at a state-owned bank.
“We are well advanced in submitting a CBDC pilot request to the RBI. We expect approval to come within one to two months.”
The central bank has also asked smaller banks to seek feedback from those currently running the pilots, the bankers said.
The RBI did not immediately respond to an email from Reuters seeking comment.
(Reporting by Siddhi Nayak; Editing by Sohini Goswami)
