JNS: The Reserve Bank of India (RBI) will launch the pilot project of the Digital Rupee in the wholesale segment on Tuesday.

Digital Rupee will be used for the settlement of secondary market transactions in government securities. The use of the E-Rupee is expected to make the inter-bank market more efficient, RBI said in a statement.

Settlement in central bank money will reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk, it said.

Based on the learnings from this pilot, other wholesale transactions, and cross-border payments will be the focus of future pilots, RBI said.

Nine banks – 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 have been identified for participation in the pilot.

The first pilot use of the Digital Rupee in the retail segment is planned for launch within a month in select locations in closed user groups comprising customers and merchants.

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