The Reserve Bank of India (RBI) will commence the pilot programme of the digital rupee for the wholesale segment on 1 November.

The regulator has identified nine banks for participation in the pilot. These include 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.

The use case for this pilot is the settlement of secondary market transactions in government securities. 

“Use in the wholesale segment is expected to make the inter-bank market more efficient," the RBI said.

The settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk, the RBI added. 

Going forward, other wholesale transactions and cross-border payments would be the focus of future pilots, based on the learnings from this pilot.

“The first pilot in the digital rupee - retail segment (e ₹-R) is planned for launch within a month in select locations in closed user groups comprising customers and merchants. The details regarding operationalisation of e ₹-R pilot shall be communicated in due course," the central bank said.