India Moves Toward Tokenized Bank Deposits amid Push for Digital Finance Rules
The Reserve Bank of India (RBI) is preparing to launch a pilot program for tokenized bank deposits, marking another milestone in India’s push toward digitized financial systems per .
The plan coincides with recent remarks by Finance Minister Nirmala Sitharaman, who signaled that the government is working toward a regulatory structure to guide the adoption of emerging digital asset technologies.
RBI to Begin Pilot This Week
The pilot, expected to begin on October 8, will allow select commercial banks to convert traditional deposits into digital tokens that can be settled on a blockchain-based infrastructure. The system will initially operate within the wholesale segment, using the RBI’s central bank digital currency (CBDC) for settlement.
The project is intended to test whether tokenized deposits can improve efficiency, transparency, and settlement speed while maintaining the identical security and backing as traditional deposits. The RBI is also assessing the potential for expanding tokenization to money market instruments such as commercial papers and certificates of deposit in future phases.
Finance Minister’s Regulatory Signal
Finance Minister Nirmala Sitharaman recently hinted that a regulatory framework for tokenized financial assets could soon take shape. Speaking at a policy event in New Delhi, she said the government’s priority is to balance innovation with oversight.
“We are working closely with the Reserve Bank of India to promote responsible innovation,” Sitharaman said. “Our focus is on fostering transparency and ensuring that the use of digital financial instruments remains secure for users and stable for the system.”
She added that ongoing collaboration between the government and financial regulators aims to create an environment where technology adoption in finance does not outpace legal and consumer protection measures.
“India’s approach will remain measured and inclusive,” she noted. “Innovation must serve the economy without creating new risks for participants.”
Strengthening Oversight and Preparing for Stablecoins
India’s Financial Intelligence Unit (FIU-IND) recently to 25 offshore cryptocurrency platforms for violating anti-money laundering rules under the Prevention of Money Laundering Act (PMLA). The platforms, including names like Paxful, LBank, and CoinEx, were found servicing Indian users without registration, prompting internet service providers to block access to their websites and apps. The action underscores India’s tightening oversight of digital assets and its commitment to aligning with global AML standards.
At the identical time, Finance Minister Nirmala Sitharaman has to “prepare to engage” with stablecoins, noting their growing impact on global money flows and capital markets. Her remarks signal a shift toward proactive engagement and regulatory preparedness, reflecting India’s evolving approach to digital assets as part of its broader financial modernization strategy
