More Stories

Informist, Monday, Sept. 15, 2025

By Cassandra Carvalho

MUMBAI – The Reserve Bank of India officials met representatives of primary dealers earlier this month and asked them to step up the use of the wholesale e-rupee pilot in their operations, treasury officials who attended the meeting said. While primary dealerships voiced concerns and challenges they were facing in using the central bank digital currency, RBI officials asked them to begin daily trades using the pilot for government securities by the end of September.

The central bank had launched its wholesale and retail pilots using the e-rupee, the RBI's central bank digital currency, in late 2022. The wholesale pilot initially covered only government securities, and the call money market pilot was added in 2023. The pilots, initially restricted to nine banks, now have 14 participants as of January. In 2024-25 (Apr-Mar), the RBI's FinTech department included standalone primary dealers in the e-rupee wholesale ecosystem and upgraded the technological architecture, the RBI annual report said.

Several primary dealers trade in the call money market on a daily basis, though the trades are limited. There are not many operational differences between the e-rupee segment and the broader market, except for the settlement, which takes place using the central bank's digital currency instead of real-time gross settlement, as is the case with trades on the Clearing Corp. of India Ltd., dealers said.

"On the G-Sec side, (in) CBDC, the RBI is pushing for a pilot project and asking us (standalone primary dealers) to start," a senior official at a standalone primary dealership said. "Our IT (information technology) team has been asked to make the necessary arrangements, and shortly, there will be some start of one or two deals."

Several primary dealerships had, till recently, not even set up the infrastructure to trade using the government securities pilot, due to the limited scope and liquidity of the market and the perceived lack of utility and the operational costs associated with it, officials said. This was likely seen as a problem area by the RBI at the meeting. However, primary dealerships face several operational challenges in entering the government securities pilot, even more than banks did when they began the pilot.

Two of the main constraints are settlement and funding, which go hand in hand. Settlement in the government securities market on the RBI's Negotiated Dealing System-Order Matching platform is made the day after the trade is conducted. Such an arrangement is easier for primary dealers to transact in gilts, since they are largely dependent on borrowing from money markets for their funding requirements. The e-rupee pilot settles trades on a 'T+0' basis, which have to be pre-funded using the e-rupee. This e-rupee has to be sourced from banks, which get it from the RBI itself. The presence of a middleman adds to the operational burden of standalone primary dealerships. 

Moreover, unlike banks, primary dealers are leveraged traders and meet funding needs by lending securities in the repo market--the Clearcorp Repo Order Matching System--in exchange for cash. The e-rupee platform is not equipped with technical infrastructure to access the repo market, dealers said.

"So there is an operational challenge involved because both platforms are separately settled," one of the people who attended the meeting said. "The operational issue and funding issue are there because both platforms have no interaction and operate independently."

Those who attended the meeting raised these issues with the central bank, and discussions on possible solutions are ongoing at the level of the individual primary dealers, they said. However, the central bank was keen for all standalone primary dealerships to begin with test trades by the end of the month, despite the challenges and limitations.

Some primary dealerships have already begun trials through this platform, the officials said. Others said they were currently configuring the technical infrastructure and aim to conduct test trades by the end of September. Additional terminals are being set up, with some internal software migration and modification of modules required, they said. Communication between primary dealerships and the central bank regarding implementation is still ongoing through electronic mails, conference calls and offline discussions, dealers said. Some dealers are waiting for a formalised set of instructions from the central bank, they said.

"Solutions were not particularly discussed. There were more discussions as to what needs to be done. And it is at the very early stage right now," one of the officials said. "So, let's wait. Let's see what RBI comes up with. It's a compliance issue... The discussions are happening."

Recently, trade via the e-rupee in the gilt market has picked up, as banks with access to this facility and standalone primary dealers have begun trial trades in various government securities. On Friday, 10 trades were conducted using the wholesale digital rupee pilot, totalling INR 5.00 billion in the 6.75%, 2029 bond. In contrast, 16 trades were made using the method on Thursday, totalling INR 7.70 billion in the 2031 floating rate bond. In August, several trades were conducted via the e-rupee wholesale pilot in state government securities. On Aug. 13 and Aug. 14, eleven trades worth a total of nearly INR 5.00 billion were conducted in state bonds using this method.   

The RBI has been pushing participants in the pilot to adopt the e-rupee platform, especially for wholesale trades. The central bank's view is that the e-rupee trades are "expected to reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk". However, there was no wholesale e-rupee in circulation at the end of March, compared to around 800,000 a year ago. The central bank has been continuously urging banks with access to this facility to conduct test trades in the government bond market to achieve their targets, according to treasury officials from banks with access to the wholesale e-rupee pilot.

"We have given up on it, for the most part. We aren't very keen on continuing," a treasury official at one of the banks said. "The pilot has been going on for so long, there is no clarity on what is the next step."   End

With inputs from Aaryan Khanna and Srijita Bose

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.