RBI Set to Launch Digital Rupee Today, Things to Know

The Reserve Bank of India has announced that the first pilot programme for retail digital rupees (e-R) will start on December 1st, 2022.

“The closed user group (CUG), made up of participating customers and merchants, would be responsible for the trial’s coverage of a few selected sites. The digital rupee would look like an electronic token that can be used instead of money. The way paper currency and coins are currently issued, it would be issued in the same denominations. Intermediaries, such as a bank, would be used to distribute it, the statement released by the RBI said.

The partner banks will offer users a mobile-based digital wallet that they can use to transact with e-R. The central bank states that both person-to-person (P2P) and person-to-merchant (P2M) transactions are feasible. The QR codes that are displayed at retail places can be used to make payments to retailers.

The RBI has also chosen eight banks to take part in this trial project over time. Four banks—State Bank of India, ICICI Bank, Yes Bank, and IDFC Initial Bank—would launch the first phase in four different places. Later on, this project will involve Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank.

Mumbai, New Delhi, Bengaluru, and Bhubaneswar would be the first cities where the experiment is put into practice. Ahmedabad, Shimla, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Gangtok will also be covered with time. The scope of the pilot project may be gradually increased to accommodate more banks, users, and locations, according to the RBI.

RBI Governor Shaktikanta Das stated earlier this month that the bank would run a parallel retail e-rupee experiment to the wholesale e-rupee pilot. The RBI’s overall objective is to fully operational launch of the CBDC (Central Bank Digital Currency) “in the near future,” Das added, declining to provide a timeline.

“I don’t want to provide a target date for when the CBDC will be completely operational since this is something we must undertake with extreme caution. This is the first time the entire world has done it. We don’t want to be in a rush, “He stated. The RBI will want to address all of those issues and introduce the CBDC in a way that is non-disruptive because there will be some technological and procedural hurdles, he said.

The pilot programme, according to the central bank, would assess the stability of the complete creation, distribution, and retail use of digital rupees in real time. Based on the lessons learned from this pilot, various aspects and uses of the e- R token and architecture will be evaluated in further pilots.

What will the Retail e-rupee be?

Since it will mostly be used for retail transactions, the retail e-rupee will simply be an electronic form of cash. Everyone may utilise it, including the private sector, non-financial consumers, and businesses, as it will be the central bank’s direct liability. It will be able to provide access to safe money for settlement and payment as well.

“CBDC is legal tender issued in digital form by a central bank,” the RBI had previously noted. It is similar to paper currency and can be used interchangeably with it. The only difference is its form.

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