The Reserve Bank of India (RBI) on November 29 announced that the first pilot for the retail version of the digital rupee (e₹-R) would be introduced on December 1, 2022.
It may be recalled that the RBI had on October 31 indicated that the pilot in e₹-R would commence in a month’s time.
The pilot would cover select locations in closed user groups (CUG) comprising participating customers and merchants.
The e₹-R would be in the form of a digital token that represents legal tender.
It would be issued in the same denominations as paper currency and coins are currently issued and would be distributed through banks.
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“Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones / devices,” the RBI said.
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.
The e₹-R would offer features of physical cash such as 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.
“The pilot will test the robustness of the entire process of digital rupee creation, distribution and retail usage in real time. Different features and applications of the e₹- R token and architecture will be tested in future pilots, based on the learnings from this pilot,” the RBi said.
Eight banks have been identified for phase-wise participation in this pilot. The first phase will begin with four banks, namely State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in four cities across the country.
Four more banks including Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot subsequently.
“The pilot would initially cover four cities, namely Mumbai, New Delhi, Bengaluru and Bhubaneswar and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla,” RBI said in a statement.
The scope of the pilot may be expanded gradually to include more banks, users and locations as needed, it added.