RBI's retail CBDC pilot includes blockchain technologies

Tuesday 20 December 2022 09:29 CET | News

The Reserve Bank of India has launched CBDC pilots in the wholesale and the retail segment, with the retail one including blockchain-based components.


According to a statement issued by the Union Minister of State for Finance, the wholesale segment pilot is named Digital Rupee -Wholesale, and it was launched on 1 November 2022. This pilot is limited to the settlement of secondary market transactions in government securities, and it aims to explore how the digital rupee could improve the efficiency of the inter-bank market. 

This could be achieved by anticipating the need for a settlement guarantee infrastructure or for collateral to mitigate settlement risk. As a result, settlements in central bank money would reduce transaction costs. 

As for the retail segment pilot, it was named Rupee-Retail and launched on 1 December 2022 targeting a closed user group of participating customers and merchants. According to, there are 8 banks that are suited for phase-wise participation in the retail pilot project, including the State Bank of India, the ICICI Bank, the Yes Bank and the IDFC First Bank, all of which will participate in the first phase. The second phase will involve the Bank of Baroda, the Union Bank of India, the HDFC Bank and the Kotak Mahindra Bank. 

According to the same source, the retail version of the CBDC is taking on the form of a digital token that represents legal tender, and it is being issued in the same denominations as paper currency and coins. The token can be distributed through financial intermediaries, and users will be able to perform Person to Person (P2P) and Person to Merchant (P2M) transactions with the digital rupee through digital wallets offered by the participating banks. 

Furthermore, the CBDC will be similar to cash in the sense that it won’t earn any interest and can be converted to other forms of money.


The Reserve Bank of India has launched CBDC pilots in the wholesale and the retail segment, with the retail one including blockchain-based components.


How will a CBDC impact India’s economy? 

India’s digital rupee will debut by early 2023 according to, as such, the country’s finance minister introduced the provision for the taxation of virtual digital assets, bringing Cryptocurrencies & Non-Fungible Tokens (NFTs) under a tax net. As per Section 115BBH, earnings from the transfer of VDAs (Virtual Digital Assets) will be subject to a 30% tax. 

Moreover, increased acceptance of digital payments by MSMEs is another factor that encouraged India to launch a legal digital alternative into the market. The increasing acceptance of private VDAs also highlights the importance of having a central-bank-issued digital payment system. 

When it comes to cybercrime, India might need to adopt stricter regulations and enhanced security tactics in order to tackle disruptions and minimise economic shock.

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Keywords: CBDC, digital assets, cryptocurrency, retail banking, blockchain
Categories: Banking & Fintech
Companies: Reserve Bank of India
Countries: India
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