RBI announces launch of first pilot for digital Rupee on Dec 1

The Reserve Bank of India announced the launch of the first pilot for retail digital Rupee (e₹-R) on December 1. This comes after the apex bank stated on October 31 that the pilot would commence in a month’s time. 

The pilot will test the robustness of the entire process, the RBI said, of digital Rupee creation, distribution and retail usage in real time. Different features and applications of the token and architecture will be tested in future pilots, which will be based on the learnings of this pilot. 

The RBI said that the pilot would cover select locations in a closed user group comprising participating customers and merchants. The e₹-R would be in the form of a token that represents legal tender, it said. The denominations in use would be the same as paper currency and coins in circulation currently. 

e₹-R would be distributed through intermediaries, i.e. banks, it said. Users would be able to transact – person-to-person or person-to-merchant – with digital Rupee through a digital wallet offered by participating banks and stored on mobile phones and devices. Payments to merchants could be made using QR codes that will be on display  at merchant sites. 

It must be mentioned that e₹-R can be converted into other forms of money, like deposits with banks. It will not earn any interest. 

Eight banks have been identified for participation 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. 

Subsequently four more banks including Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot.

The pilot would initially cover four cities – Mumbai, New Delhi, Bengaluru and Bhubaneswar– and would gradually extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. More banks and more cities might be included gradually. 

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