India’s CBDC adds PNB, Axis Bank & more to its pilot, RBI satisfied with current progress

On Tuesday, the Reserve Bank of India (RBI) announced that it is expanding the scope of the Central Bank Digital Currency pilot by including more banks and locations.

It must be noted that on 1 November 2022, the first pilot of the Digital Rupee -Wholesale (CBDC-W) segment commenced. Thereafter, the first pilot for retail digital rupee (CBDC-R) was initiated on 1 December 2022.

These pilots were introduced in New Delhi, Mumbai, Bengaluru, and Bhubaneswar involving participating customers and merchants in a closed user group (CUG). Meanwhile, other locations such as Ahmedabad, Hyderabad, Indore, Lucknow, Chandigarh, Patna, Shimla, and Kochi were added in phases to the pilot.

Which banks are participating in the CBDC pilot?

Initially, the pilot started with four banks, namely, State Bank of India, ICICI Bank, IDFC First Bank, and Yes Bank. Subsequently, HDFC Bank, Kotak Mahindra Bank, Union Bank of India, and Bank of Baroda joined the pilot.

Now, five more banks have been added. “Five more banks (viz., Punjab National Bank, Canara Bank, Federal Bank, Axis Bank and IndusInd Bank) are in the process of joining the pilot. The scope of the pilot is being expanded gradually to include more banks, users and locations as needed,” states the RBI release.

Further, the release also mentioned that the results of both the pilots, i.e., retail and wholesale pilots are satisfactory and as per expectations.

How CBDCs could benefit?

One of the major advantages of CBDCs is that they can provide a secure and reliable means of digital payment and remittance. Moreover, they can be integrated into existing payment systems.

Further, it is anticipated that CBDC usage will increase the efficiency of the interbank market. Also, e-rupee settlements would reduce transaction costs by preventing the need for collateral to mitigate settlement risk as well as for settlement guarantee infrastructure.