India’s central bank, the Reserve Bank of India (RBI), has reportedly asked four banks to pilot the country’s central bank digital currency (CBDC) ahead of its public launch.
RBI to pilot India CBDC with public sector banks
The Reserve Bank of India (RBI), the country’s central bank, has reportedly asked four public sector banks to test the Central Bank of India’s (CBDC) digital currency, Moneycontrol reported on Monday, citing two unnamed banking officials.
One of the officials reportedly said:
The RBI has asked State Bank of India, Punjab National Bank, Union Bank of India and Bank of Baroda to manage the pilot in-house.
“There is a pilot project on CBDCs,” another senior public sector bank official confirmed to the publication. “The RBI can come with the launch this year. When exactly it will roll out the product and specs remains to be seen.
The Reserve Bank of India is also reportedly consulting several fintech companies on the digital rupee. Among them is the American company FIS, which advises central banks on CBDC-related issues, such as offline and programmable payments, financial inclusion and cross-border CBDC payments.
FIS Senior Director Julia Demidova told the outlet last week:
FIS has had various engagements with the RBI… Our connected ecosystem could be extended to the RBI to experiment with various CBDC options.
“Whether it is a wholesale or retail CBDC transaction, our technology can also be extended to commercial banks where they can test and tokenize central bank currency in the form of regulated digital currency,” a- she added.
Indian Finance Minister Nirmala Sitharaman announced during the presentation of the 2022 Federal Budget in February that the RBI will issue a CBDC in that fiscal year. In May, the central bank said it would take a “graduated approach” to launch the digital rupee.
“The digital rupee will be the digital form of our physical rupee and will be regulated by the RBI. It will be such a system that will allow an exchange of physical currency with digital currency,” Indian Prime Minister Narendra Modi previously explained.
Meanwhile, the RBI is advocating for a ban on all cryptocurrencies such as bitcoin and ether. RBI Deputy Governor T. Rabi Sankar said earlier this year that cryptocurrencies have “no underlying cash flows” and “no intrinsic value”, adding that “they are ‘akin to Ponzi schemes, and may even be worse’. The central banker pointed out, “Banning cryptocurrency is perhaps the smartest choice India has to make.”
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