Lok Sabha Question No. 741 (UNSTARRED), answered on 2022-12-12
Subject: Central Bank Digital Currency
Ministry: FINANCE
Asked by: Raja Amareshwara Naik, Vinod Kumar Sonkar, Bhola Singh, Rajveer (Raju Bhaiya) Singh, Sukanta Majumdar, Sangeeta Kumari Singh Deo, Jayanta Kumar Roy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA UNSTARRED QUESTION NO.741 TO BE ANSWERED ON 12.12.2022

## Central Bank Digital Currency

741. SHRI RAJA AMARESHWARA NAIK: SHRI VINOD KUMAR SONKAR: SHRI BHOLA SINGH: SHRI RAJVEER SINGH (RAJU BHAIYA): DR. SUKANTA MAJUMDAR: SHRIMATI SANGEETA KUMARI SINGH DEO: DR. JAYANTA KUMAR ROY:

Will the Minister of FINANCE

be pleased to state:

- (a) whether the Reserve Bank of India (RBI) has issued any concept note on Central Bank Digital Currency (CBDC) and if so, the details thereof;
- (b)  whether  the  Government  has  launched  its  own  CBDCs  based  on  the  blockchain technology in the Country and if so, the details thereof;
- (c) whether the RBI is working on two fronts to test the CBDC: one for the wholesale market, and the other for the retail market (CBDC-R) and if so, the details thereof;
- (d) whether RBI has roped in 5 Banks to work on the retail pilot project of CBDCs and if so, the details thereof;
- (e) whether the RBI is rolling out soon the retail version of the CBDC in the country and if so, the details thereof;
- (f) whether the RBI has launched a Pilot project on Digital rupee for wholesale segment and if so, the details thereof; and
- (g) the other steps being taken by the Government for full operationalisation of CBDC?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a): The Reserve Bank of India (RBI) has issued a concept note on Central Bank Digital Currency (CBDC)  on October 7, 2022. The Note is accessible at RBI's website (https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=1218).
- (b): The  CBDC pilot  launched  by  the  RBI  in  retail  segment  has  components  based  on blockchain technology.
- (c): RBI has launched pilots of CBDC in both Wholesale and Retail segments. 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.  Use  of  (e₹-W),  is  expected  to  make  the  inter-bank market more efficient. 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  pilot  in  retail  segment,  known  as  digital  Rupee-Retail  (e₹-R),  was launched on December 01, 2022, within a closed user group (CUG) comprising participating customers and merchants.

(d):     RBI has identified eight banks for phase-wise participation in the retail pilot project. The first phase includes four banks, namely the State Bank of India, the ICICI Bank, the Yes Bank and the IDFC First Bank. Subsequently, another four banks, viz., the Bank of Baroda, the Union Bank of India, the HDFC Bank and the Kotak Mahindra Bank will participate in the retail pilot.

(e):      RBI  has  already  rolled  out  a  pilot  in  the  retail  version  of  the  CBDC  (e₹-R),  on December 01, 2022. The e₹-R is in the form of a digital token that represents legal tender. It is  being  issued  in  the  same  denominations  as  the  paper  currency  and  coins.  It  is  being distributed through financial intermediaries, i.e., the banks. Users will be able to transact with e₹- R through a digital wallet offered by the participating banks. Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). The e₹-R offers features of physical cash like trust, safety and settlement finality. Like cash, the CBDC will not earn any interest and can be converted to other forms of money, like deposits with banks.

(f):  RBI has launched a pilot project of CBDC in Wholesale segment as detailed at (c) above.

(g): Other  steps  being  taken  by  RBI  for  full  operationalisation  of  CBDC  include expanding the scope of the pilots gradually to include more banks, users and locations based on feedback received during the pilots.

*****