Tokenised Deposits: Bank-to-Bank Transfers

What Are Tokenised Bank Deposits?

Tokenised deposits are digital versions of traditional bank deposits — backed 1:1 by real money but represented as secure digital tokens on an approved ledger. Under Tokenised Deposit Pilot India, these tokens exist within regulated bank networks, allowing faster and programmable value transfers between financial institutions.

Unlike cryptocurrencies, tokenised deposits are issued by banks, not mined or traded. Each token represents a legal claim on the bank, just like the balance in your savings account. The key advantage: these tokens move instantly, across banks, without waiting for interbank clearing cycles.

The Reserve Bank of India (RBI) has been testing this concept with select banks as part of its “Digital Money Beyond CBDC” initiative — aimed at improving settlement speed and reducing backend risk.

How Bank-to-Bank Transfers Work with Tokens

Traditional interbank transfers — even via RTGS — involve multiple reconciliation steps. Under Interbank Digital Transfer System, tokenised deposits make this process simpler: each participating bank issues, transfers, or redeems tokens in real time on a shared permissioned ledger.

Here’s how it works:

1. Issuance: A bank converts part of its deposit liabilities into tokens, backed by its real balances.
2. Transfer: When one bank sends tokens to another, settlement happens instantly — no intermediary or central queue.
3. Redemption: Receiving banks can redeem tokens back into deposits or hold them for liquidity management.

This design removes the lag of traditional clearing systems and improves liquidity visibility between banks. In pilot tests, tokenised deposit transfers settled in under one second — a fraction of RTGS timelines.

Why Tokenised Deposits Differ from CBDC

While both concepts deal with digital forms of money, their purpose and control differ. Under Cbdc Vs Token Money, a CBDC (Central Bank Digital Currency) is issued directly by the RBI, while tokenised deposits are issued by individual commercial banks.

Key differences between CBDC and tokenised deposits:

• Issuer: CBDC comes from the central bank; tokenised deposits come from your bank.
• Account linkage: Tokenised deposits remain tied to your bank account; CBDC exists as a separate wallet balance.
• Use case: CBDC targets retail and government payments, while tokenised deposits target interbank and institutional use.
• Privacy: Tokenised deposits retain bank-grade KYC controls, ensuring traceability within regulated limits.
• Settlement model: Tokens move value directly between banks’ ledgers, bypassing central clearinghouses.

Globally, banks in Singapore, Australia, and the UK are exploring tokenised deposit frameworks to enhance real-time settlement across currencies. The BIS (Bank for International Settlements) projects such systems could cut cross-border transfer costs by up to 40 %.

What’s Next for India’s Token Money Framework

India’s financial infrastructure is entering a new phase of experimentation. Under Future Of Digital Banking Infrastructure, the RBI is expected to expand tokenised deposit pilots to include NBFCs and payment banks by mid-2026.

What’s coming next:

1. Programmable transfers: Smart contracts could automate payments between banks for loans, settlements, or margin calls.
2. Cross-bank reconciliation: A shared token ledger could act as a real-time audit trail for regulators.
3. Hybrid models: Tokenised deposits may integrate with CBDC to allow seamless retail-to-wholesale conversions.
4. 24×7 availability: Settlement won’t depend on RTGS hours — tokens move any time, any day.

For consumers, the change will be invisible — your banking app will continue to show balances as usual. But behind the scenes, money will travel faster, cheaper, and smarter than ever before.