First Pilot For Retail Digital Rupee To Begin In Delhi, Mumbai, Bengaluru And Bhubaneshwar Tomorrow

The Reserve Bank of India (RBI) on Tuesday (29 November) announced the launch of the first pilot for retail digital rupee (e₹-R) in Mumbai, New Delhi, Bengaluru and Bhubaneswar on 1 December.

This follows a month after the RBI had started a pilot in the digital rupee - wholesale segment on 1 November.

The pilot will be later extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.

The first phase of the retail digital rupee pilot will begin with four banks - State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank, the RBI said in a statement while announcing operationalisation of Central Bank Digital Currency – Retail (e₹-R) Pilot.

"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," the RBI said.

CBDC is a digital form of currency notes issued by a central bank. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance are specific to each country's unique requirements.

The central bank said that the 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," the RBI said.

The pilot, it said, 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 learnings from this pilot.

The central bank said that the pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants.

RBI said that eight banks have been identified for phase-wise participation in this pilot.

The first phase will begin with four banks - SBI, ICICI Bank, Yes Bank and IDFC First Bank - and four more banks - Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank - will join this pilot subsequently, the central bank said.

The scope of pilot may be expanded gradually to include more banks, users and locations as needed, it added.

(With inputs from PTI)