RBI plans to extend wholesale CBDC, Frictionless credit

Reserve Bank is planning to extend wholesale Central Bank Digital Currency (CBDC) as token for interbank borrowing or call money market, RBI sources said on Tuesday.The pilot in wholesale segment, known as the Digital Rupee -Wholesale (e₹-W), was launched on November 1, 2022, with use case being limited to the settlement of secondary market transactions in government securities."RBI is now planning to go into interbank borrowing market. The purpose of wholesale CBDC has been to try out different technologies...experimenting on technology is relatively easier for wholesale pilot because participants are related," RBI sources said. RBI is also hoping to touch 1 billion transactions per day on the retail CBDC by the end of this year.
Sources said the retail CBDC pilot has seen good adoption with about 20,000 to 25,000 daily transactions in July. Pilots are on with 13 banks in 26 locations with 1.4 million users. “It is expected that retail CBDC transactions will touch 1 billion by December 2023,” said the source, adding that a number of initiatives have been taken to popularise its usage such as making it interoperable with QR codes for merchants. There is no end date for the CBDC pilot studies as the idea is to examine its impact on the financial system. “CBDCs are not used globally and its impact is not understood...until we understand the risks clearly, it would be difficult to expand it at scale,” said the source.
The RBI is also planning to extend its frictionless credit delivery to other segments using its public tech platform, which was developed in association with Reserve Bank Innovation Hub. The RBI had in September 2022 announced a pilot for frictionless delivery of KCC loans up to Rs 1.6 lakh. According to sources, the pilots were conducted in five states including Tamil Nadu, Madhya Pradesh, Maharashtra, Uttar Pradesh and Karnataka as well as for disbursing dairy loans in Gujarat. Loans worth Rs 100 crore were disbursed in the pilots for KCC and dairy loans each.Based on the pilot results, it is likely to be extended to MSME loans of up to Rs 1 crore, small value loans, personal loans and gradually even to educational and car loans.