RBI to Initiate Deposit Tokenisation Pilot Program on October 8

In a major step towards the digital evolution of India’s banking ecosystem, the Reserve Bank of India (RBI) has announced that it will launch a pilot project on deposit tokenisation starting October 8, as per Reuters. 

The exercise will be built on the wholesale leg of India’s Central Bank Digital Currency (CBDC), or e₹-W, as the underlying settlement layer. The initiative marks a key milestone in RBI’s ongoing efforts to explore how digital technologies can transform interbank settlements and enhance efficiency in financial transactions.

Understanding Deposit Tokenisation

Deposit tokenisation involves converting traditional bank deposits into digital tokens that exist on a secure distributed ledger, such as a blockchain. Each token represents one unit of real-world deposit value, maintaining a 1:1 parity, ensuring the digital version is fully backed and redeemable.

The process allows transactions to occur more swiftly, securely, and cost-effectively, while offering greater transparency and reducing systemic friction. It serves as a bridge between conventional banking systems and blockchain-based digital finance. 

According to the RBI, the goal is to create a system that makes interbank transfers smoother and settlement processes more reliable without compromising financial integrity.

CBDC Wholesale Chosen as the Base Layer

The pilot will leverage e₹-W, India’s wholesale CBDC, which was originally developed for interbank and institutional settlements, particularly for transactions in the government securities market. Using this infrastructure ensures that the deposit tokens are backed by central bank money, offering unmatched reliability, finality, and security.

This setup also provides a controlled environment to test tokenised deposits before exploring broader retail applications. It reflects the RBI’s strategy of carefully phasing digital innovations to balance progress with systemic stability. By using the CBDC wholesale network as the foundation, the RBI ensures that every digital transaction maintains the same trust as physical central bank-backed money.

India’s Ongoing CBDC Journey

India has been gradually expanding its digital currency framework. The wholesale CBDC pilot was launched on November 1, 2022, aimed at improving efficiency in the government securities settlement process. Soon after, the retail CBDC (e₹-R) went live on December 1, 2022, targeting person-to-person (P2P) and person-to-merchant (P2M) transactions in select cities.

As of March 2024, retail CBDC usage witnessed remarkable growth; the outstanding amount rose from around ₹6 crore to ₹234 crore, marking a 39-fold increase in a single year.

Read More: RBI Plans Market-Linked Framework for External Commercial Borrowings!

Conclusion

The deposit tokenisation pilot represents a forward-looking step in India’s financial modernisation journey. By building on the CBDC wholesale platform, the RBI is set to explore new frontiers in digital finance that could redefine how money moves across the banking ecosystem. 

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