The Reserve Bank of India (RBI) has selected at least five commercial banks to participate in its Central Bank Retail Digital Currency (CBDC) trials. Banks include SBI, ICICI, IDFC, HDFC in RBI, according to India’s Economic Times, and the pilot is likely to go live soon.

Since the government announced plans for CBDC pilots in February, India has moved quickly. It published a concept paper and roadmap for a digital rupee in October. Earlier this month, it launched its first wholesale CBDC test targeting the settlement of government bond transactions.

The retail digital rupee trials will also involve the National Payments Corporation of India (NPCI), the organization responsible for most of India’s payment rails, including UPI. One of the key questions it plans to explore is whether the system will be interoperable with current payment systems or whether it will build a new framework. For one thing, some level of interoperability is inevitable. But possibly, one could have a CBDC that uses the same current payment rails.

On a related note, the NPCI has recently advocated the creation of a separate network. In August, its CEO Dilip Asbe called for an Indian blockchain platform that would connect public and permissioned blockchains.

Ashutosh Dubey, NPCI Senior Innovation Leader, recently wrote about integrated finance. Where today financial services enablers like Stripe or digital banks are centralized organizations, Embedded Finance 3.0 will include payments (presumably using a distributed ledger), tokenized assets, and DeFi protocols for exchanges and lending markets.