RBI starts on December 1st with the first pilot project in the retail segment; All details here

Last updated: November 29, 2022, 4:14 PM IST

According to RBI, users can trade with e₹-R via a digital wallet offered by participating banks and stored on mobile phones/devices.

The RBI says the digital rupee e₹-R will be in the same denominations that paper money and coins are currently issued

The Reserve Bank of India (RBI) on Tuesday announced it would launch the first retail digital rupee (e₹-R) pilot on December 1. It comes less than a month after the central bank launched its first digital pilot on Nov. 1, Rupee – Wholesale Segment (e₹-W).

In a statement Tuesday, RBI said users will be able to trade the digital rupee, or e₹-R, through a digital wallet offered by participating banks and stored on mobile phones/devices. Transactions can be both person-to-person (P2P) and person-to-merchant (P2M).

It said the digital rupee would be issued in the same denominations that paper money and coins are currently issued.

After the government launched the first digital rupee pilot in the wholesale segment on November 1, a total of 48 trades worth Rs 275 crore were made on the first day using the RBI’s central bank digital currency (CBDC).

“The Reserve Bank announces the launch of the first digital retail rupee (e₹-R) pilot on December 1, 2022. It is recalled that in a press release dated October 31, 2022, RBI indicated that the pilot project in e₹-R would start in a month,” RBI said on Tuesday.

Eight banks were identified for phased participation in this pilot project. The first phase will start 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 later join this pilot, according to the statement.

It said the pilot would initially cover four cities – Mumbai, New Delhi, Bengaluru and Bhubaneswar – and later expand to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. The scope of the pilot can be incrementally expanded as needed to include additional banks, users and locations.

RBI also said the pilot would cover select locations in closed user groups (CUG) that include participating customers and dealers. The e₹-R would take the form of a digital token representing legal tender. It would be issued in the same denominations that paper money and coins are currently issued.

“It (e₹-R) would be distributed through intermediaries, i.e. banks. Users can transact with e₹-R through a digital wallet offered by 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 via QR codes displayed at merchant locations. The e₹-R would offer features of physical cash such as trust, security and settlement finality. As in the case of cash, it does not bear interest and can be converted into other forms of money such as deposits with banks,” the RBI said.

The pilot will test the robustness of the entire process of real-time digital rupee creation, distribution and consumption in retail. Based on the findings from this pilot project, various functions and applications of the e₹-R token and architecture will be tested in future pilot projects.

In October, RBI announced that it would soon begin a pilot rollout of the digital rupee (e₹) for specific use cases.

The Central Bank Digital Currency (CBDC) is a digital or virtual currency but not comparable to the private virtual currencies or cryptocurrencies including Bitcoin, Ethereum, etc. that have mushroomed over the past decade. Private virtual currencies do not represent any debt or liability of any person as there is no issuer.

In her 2022-23 budget speech earlier this year, Finance Minister Nirmala Sitharaman said RBI will launch a digital currency in the current fiscal year to boost the digital economy and efficient currency management.

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Mohammed HarisHaris is a business journalist with over eight years of experience. He writes on various topics related to markets, economics and business….Read more

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