The Reserve Bank of India will launch the pilot for its digital rupee — wholesale segment on Tuesday, the central bank said in a release.

The pilot will entail the use of the digital rupee for settlement of secondary transactions in government securities, which 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,” it said. The central bank, had on October 7, announced that it will commence pilot launches of digital rupee (e₹-W) for specific use cases, beginning with use cases in the wholesale segment.

The RBI had also issued a concept note which said that the ‘e-rupee’ will provide an additional digital option to the currently available forms of money that is likely to be easier, faster and cheaper.

It added that nine banks have been identified for participation in the pilot — 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.

The first pilot in digital rupee for the retail segment (e₹-R) is expected to be launched within a month,in select locations and closed user groups, RBI said.