In a sweeping report on the application of blockchain technology (dubbed BCT) in financial services, RBI’s Institute for Development & Research in Banking Technology points to the groundbreaking digital currency initiatives underway at other central banks around the world, including the UK, Canada, Sweden and the Netherlands, and urges the RBI to follow suit.

The report states: "From a technological perspective, we feel that BCT has matured enough and there is sufficient awareness among the stakeholders which makes this an appropriate time for initiating suitable efforts towards digitising the Indian Rupee through BCT."

The recommendation comes in a prospective roadmap for the adoption of blockchain technology in Indian financial services. At an interbank level, it points to potential benefits across a range of potential use case, including centralised KYC, cross-border payments, syndicated loans, trade finance and capital markets.

Already, Axis Bank, Icici, and YES Bank have come to the fore with their own projects in payments, trade finance and vendor financing respectively.

To broaden its own understanding, the RBI research unit ran a proof-of-concept on the application of the technology in the trade finance arena using Hyperledger fabric and Chaincode. The POC was supported by the National Payments Corporation of India and backed by SBI, PNB, HDFC, Citi and deutsche Bank.

"Overall, the PoC provided a good demonstration of the use-cases and helped to broaden the understanding of the technology and its potential to other real-life applications," the report concludes. "Given the sound basis underlying the technology, the advantages to be had by its adoption, the variety of its applications that are being explored around the globe, security, privacy and scalability concerns and potential countermeasures, we recommend that the time is ripe for its adoption in India."