RBI Sankar says wholesale e-rupee aim not to replace current system

Informist, Thursday, Feb 23, 2023


By Priyasmita Dutta and Sagar Sen


BENGALURU – The purpose of launching the wholesale e-rupee pilot was not to move banks and other bond market players away from the existing system, but to try out various business models, Reserve Bank of India Deputy Governor T. Rabi Sankar said at the sidelines of the Group of 20 meeting today.


The RBI had launched the pilot of the wholesale version of the digital currency on Nov 1 and nine banks were roped in for it. The institutions selected were 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. These banks have been trading government securities using the digital currency as a medium of exchange.


"We want to have as many use cases as possible, we will try account based CBDC (central bank digital currency). We hope to launch that. That was pilot, it was not intended to move banks and others away from existing NDS-OM (Negotiated Dealing System – Order Matching) system that is there," Sankar said.


Sankar acknowledged that there were initial problems in the wholesale e-rupee pilot, but these have been fixed since then. "We adjusted the accounting, the communication between CCIL (Clearing Corp of India Ltd), RBI all that has been worked out," he said.


The central bank is now looking to use the wholesale digital currency on distributed ledger for other use cases such as money market transactions and the work was underway, Sankar said.


Asked if the central bank has any specific expansionary features in mind on the wholesale digital currency, Sankar said "everything will change. Technology will be changing. There are various technologies we want to try out, various business models we want to try out".


While the functionality of the whole e-rupee pilot has been termed a success by participants of the pilot project, trade volumes have gone down significantly since the initial weeks and there have been days when not a single trade has been executed. Today, trades aggregating 350 mln rupees were settled with the digital rupee pilot in seven deals, after three days of no trade using the digital currency.


Sankar said that currently, the focus was largely on ensuring that the retail pilot of the digital rupee achieved some scale. "So, we are targetting to have about half a million users in the next quarter and probably get almost all major banks in the loop, and as many merchants as possible. Then we would actually see people using it in sufficient numbers for us to draw some conclusions," he said.


The pilot for the retail digital rupee started on Dec 1, initially covering Mumbai, New Delhi, Bengaluru and Bhubaneswar in closed user groups, comprising customers as well as merchants. 



Sankar said that the unified payments interface was being operationalised from next month for international phone numbers, more specifically for non-resident Indians. He said that this feature was enabled a long time ago but could not be implemented because of technical issues.


Sankar said various countries were interested in the unified payments interface payments system and talks were underway with Commonwealth countries, and with many countries in the Caribbean, and Africa. South Pacific countries were also interested in using UPI and similar products, he said.


"We've seen interest from UAE, Mauritius, Indonesia, Thailand and even some Latin American countries," he said.  End


Written by Shubham Rana

Edited by Avishek Dutta


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