Reserve Bank of India (RBI) announced the launch of the much-awaited first phase of the digital form of the Indian currency for the retail segment. The merchants and retail customers in four cities, including Mumbai and Delhi, will be able to use digital rupee (e₹-R), or e-rupee, from December 1.
The central bank stated that the pilot would initially take place in four cities - Mumbai, New Delhi, Bengaluru and Bhubaneswar - and later extend 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, the RBI said.
According to the RBI, a closed user group (CUG) made up of participating customers and retailers would cover a few sites throughout the pilot. The e-R would take the shape of a digital token that serves as money.
Eight banks have been chosen by the RBI to take part in this pilot project in stages. Four banks - State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank - will launch the first phase in four different cities across the nation. Four additional banks will later join this pilot, including Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank, it said.
E-rupee would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks. According to the central bank “Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones and devices.
Both person-to-person (P2P) and person-to-merchant (P2M) transactions are possible. QR codes are used to make payments to merchants at their physical locations. "The e-R would provide characteristics of physical money, such as trust, safety, and settlement finality. Similar to cash, it won't accrue interest and can be changed into other forms of payment like bank deposits, according to the RBI.
According to the central bank, the pilot will test the robustness of the entire process of digital rupee creation, distribution and retail usage in real time.
