The Reserve Bank of India will start a pilot for deposit tokenisation on Wednesday, the central bank announced through Chief General Manager Suvendu Pati at a Mumbai event on Tuesday.
The test will use the wholesale segment of the RBI’s central bank digital currency as the base layer. A few banks will take part. The aim is to create digital versions of deposits, stocks and bonds on a blockchain to speed up payments, cut costs and boost security.
Pilot details
The pilot will build on the RBI’s wholesale CBDC network. That layer will hold the digital tokens tied to real deposits. Banks in the project will tokenize accounts and trade those tokens on the test system.
The central bank said it wants to check how tokenised deposits behave in real settings and whether the tech can slot into existing finance systems.
Pati said the regulator must make sure tokenised assets are legally sound. He urged rules that secure the rights of holders and make records enforceable. He added that risks are not unmanageable, and proper regulatory guardrails can control most problems
What tokenisation means?
Tokenisation means making a digital mirror of an asset and keeping that record on a ledger. In this case, a deposit would have a token that represents the same value as the bank balance.
The token can move on a blockchain, and that can cut the number of middlemen in a deal. It can make settlements faster and reduce fees. It can also give a clearer, tamper-resistant record of who owns what.
The RBI plans to test tokenisation not only for deposits but also for other money market tools. Pati mentioned commercial papers as a possible next target. Experiments in these areas could change how short-term debt is issued and traded.
Regulatory focus
The RBI stressed that tokenisation must sit on a sound legal base. Officials want to be sure that a token truly stands for the underlying claim.
They also want rules to handle disputes, fraud and insolvency. Pati highlighted these points when he spoke at the event.
The central bank’s move follows wider government interest in new forms of money. On October 4th, India’s Finance Minister warned that stablecoins and other innovations are reshaping money flows. She said “India Must Prepare For Stablecoins”, and with these changes and rethink some parts of their monetary systems. That view adds urgency to regulatory tests like the RBI’s pilot.
Questions and risks
Experts will watch how the pilot deals with custody and legal clarity. A token must be backed by a clear legal claim on the deposit. If that is not set in law or in contracts, token holders could face trouble in disputes.
Other risks include cyber attacks and technical glitches that could block transfers. The RBI will need ways to pause transactions and to restore records if errors occur. Regulators will also look at how tokenised assets interact with current settlement systems and with banks’ own ledgers.