RBI to Roll Out First Pilot for Retail Digital Rupee on Dec 1

Mumbai: Reserve Bank of India (RBI) will launch India’s first pilot for retail e-rupee or retail digital rupee  (e₹) or E-Rupee on December 01, 2022, the central bank announced on Tuesday.  The Digital Rupee (e₹) or E-Rupee is a digital version of the Indian Rupee. The RBI will issue it as a central bank digital currency (CBDC). The Digital Rupee was first proposed in January 2017. 

“The pilot would cover select locations in a closed user group (CUG) comprising participating customers and merchants,” the RBI said in a statement.

According to RBU, the pilot project will be rolled out in phases and the first phase will commence with four banks — State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in four cities across the country. Four other banks — Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot subsequently, the statement added. 

“The pilot would initially cover four cities, viz., Mumbai, New Delhi, Bengaluru and Bhubaneswar and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. The scope of pilot may be expanded gradually to include more banks, users and locations as needed,” a media release from RBI noted. 

The central bank had begun a pilot of the wholesale e-Rupee on November 1. The nine participating banks carried out transactions in government securities using the digital rupee. 

What is Digital Rupee?

Digital rupee, (e₹) or E-Rupee, also known as Central Bank Digital Currency (CBDC), is a digital form of currency notes issued by a central bank. 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. It won;t be different from bank notes. However, it will be in the form of a digital token that represents legal tender.

How does it work?

Users will be able to transact with e-Rupee through a digital wallet offered by the participating banks, RBI said. They can check the e-Rupee balance in the wallet. 

“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 statement read. 

CBDCs will serve two different purposes — wholesale and retails markets. 

Central Bank Digital Currency Wholesale will be used by large financial institutions, including banks, large non-banking finance companies and other big transaction institutions.

Central Bank Digital Currency Retail can be used by people for everyday transactions. This will start at select locations and banks first. People of all age groups will be included in the retail project. Then based on their experiences, the features will be changed if needed.

Where can I use an e-Rupee?

According to the RBI, Digital Rupee will be used as the settlement amount on the purchase and sale of government securities i.e. government bonds. The Reserve Bank has also said that it will also be used for retail transactions soon.  

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