The Reserve Bank of India announced the launch of the first pilot for retail digital rupee (e₹-R) on 1 December. The apex bank said on October 31 that the pilot would begin in a month’s time.
The pilot will test the robustness of the entire process of digital rupee creation, distribution and retail use in real time. Various features and applications of the token and architecture will be tested in future pilots, building on the learnings from this pilot.
RBI said the pilot will cover select locations in a closed user group of participating customers and merchants. E-R will be in the form of a token that represents legal tender. The denominations in use will be similar to paper currency and coins currently in circulation.
The distribution of E₹-R will be done through intermediaries, ie banks. Users will be able to conduct transactions – person-to-person or person-to-merchant – through digital wallets offered by participating banks and stored on mobile phones and devices. Payment to merchants can be made using the QR code that will be displayed on merchant sites.
It should be mentioned that e₹-R can be converted into other forms of money, such as deposits in banks. It will not get any interest.
Eight banks have been identified to participate in this pilot, but the first phase will begin with four banks including State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in four cities across the country.
After this, four more banks including Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot.
The pilot will initially cover four cities – Mumbai, New Delhi, Bengaluru and Bhubaneswar and will gradually expand to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. More banks and more cities can be included gradually.
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