Today, the Reserve Bank announced the launch of the first pilot for retail digital Rupee (e₹-R) on December 01, 2022.
The e₹-R would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks. Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones/devices. Transactions can be both Person to Person (P2P) and Person To Merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations. The e₹-R would offer features of physical cash like trust, safety, and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks.
India’s banking regulator said today that the pilot will test the robustness of the entire process of digital rupee creation, distribution, and retail usage in real time. “Different features and applications of the e₹-R token and architecture will be tested in future pilots, based on the learning from this pilot”, said RBI.
As per the circular, eight banks have been identified for phase-wise participation in this pilot. The first phase will begin with four banks, viz., State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank in four cities viz., Mumbai, New Delhi, Bengaluru, and Bhubaneswar. Subsequently four more banks, viz., Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank will join this pilot, extending the project to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
“The scope of the pilot may be expanded gradually to include more banks, users, and locations as needed” It added.