On 7 October 2025, the Reserve Bank of India announced it will launch a pilot for deposit tokenisation, marking a foray into creating digital tokens backed by bank deposits. The pilot would use the wholesale segment of India’s central bank digital currency (CBDC) as the underlying architecture.
Deposit tokenisation means converting a deposit account or balance into a digital token that can be used, transferred, or settled on a blockchain or ledger system. The token represents a claim on the underlying deposit. In practice, this could enable faster, cheaper, more programmable banking operations.
For banks and financial institutions, tokenisation could unlock new product designs—programmable funds, conditional transfers, real‐time settlement across institutions, and better interoperability with digital asset ecosystems. For users, it means potential gains in speed, transparency, and flexibility in movement of funds.
Yet, risks and challenges remain. Ensuring regulatory clarity and legal enforceability is critical: the token must be legally recognized as a valid claim. Also, operational risk (cybersecurity, system faults), interoperability across banks, and integration with existing financial infrastructure must be managed. The pilot will help test these.
This pilot also reinforces India’s interest in leveraging technology to transform financial services. It places India among a small group of countries experimenting with tokenised banking infrastructure. The pilot’s outcomes could influence broader adoption across retail banking, capital markets, and payments.
Overall, the deposit tokenisation initiative is an ambitious, forward-looking venture. If successful, it has potential to reshape how deposits and payments operate in India’s financial ecosystem.
