RBI to launch digital rupee on Dec 1, 4 banks in 4 cities in pilot launch

The RBI is all set to launch a pilot version of the retail digital rupee (e₹-R) in certain cities from December 1, with the option to transact like legal tender and in a bid to rival other cryptocurrencies.

The pilot version would be run among a closed user group (CUG) comprising customers and merchants.

The first phase will begin with four banks — State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in four cities across the country.

Four more banks — Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot subsequently, a media release issued by the central bank noted.

“The pilot would initially cover four cities, viz., Mumbai, New Delhi, Bengaluru and Bhubaneswar and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. The scope of pilot may be expanded gradually to include more banks, users and locations as needed,” it said.

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 and would be distributed through intermediaries, i.e., banks.

Also read: Digital Rupee or cash? What is beneficial for you?

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,” RBI said.

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, RBI said.

The pilot programme will test the robustness of the entire process of digital rupee creation, distribution and retail usage in real time. It will also test different features and applications of the e₹-R token and architecture in future pilots, based on the learnings from this pilot, it added.