The Reserve Bank of India (RBI) has selected at least five commercial banks to participate in its retail central bank digital currency (CBDC) trials. The banks include SBI, ICICI, IDFC, HDFC in RBI, according to IndiaāsĀ Economic Times, and the pilot is likely to go live soon.
Since the government announcedĀ plans for CBDC pilotsĀ in February, India has moved rapidly. It published aĀ concept paperĀ and roadmap for a digital rupee in October. At the start of this month, it launched its first wholesale CBDC trial targeting theĀ settlement of government bondĀ transactions.
The retailĀ digital rupeeĀ tests will also involve the National Payments Corporation of India (NPCI), the organization responsible for most of Indiaās payment rails, including UPI. One of the key questions it plans to explore is whether the system will be interoperable with the current payment systems or to build a new framework. On the one hand, some level of interoperability is inevitable. But conceivably, one could have a CBDC that uses the same current payment rails.
On a related note, the NPCI has recently argued for the creation of a separate network. In August, its CEO Dilip Asbe called for anĀ Indian Blockchain PlatformĀ connecting permissioned and public blockchains.
Ashutosh Dubey, the NPCI senior innovation lead, recently wrote about embedded finance. Where today the financial services enablers like Stripe or digital banks are centralized organizations,Ā Embedded Finance 3.0Ā will include payments (presumably using a distributed ledger), tokenized assets, and DeFi protocols for exchanges and lending markets.
