The Reserve Bank of India (RBI) will start a pilot project of retail digital currency, e₹-R), on December 1, 2022. A total of eight banks have been identified for the pilot project on digital rupee in retail. The first phase of the pilot project will involve 4 banks and 4 cities, with both to expand in phase 2.
The first phase will be conducted with State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank. Bank of Baroda will be involved in the second phase of the pilot project along with Union Bank of India, HDFC Bank and Kotak Mahindra Bank.
THe phase I pilot project for digital rupee in retail will cover Mumbai, New Delhi, Bengaluru, and Bhubaneswar. Cities that will be involved in the later phase include Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. As the project progresses, more banks and cities will be included.
No interest for customers on retail digital rupee
Customers will not get any interest on retail digital rupee. The digital rupee will be issued in the denomination of currency notes and coins. It will be issued as a token (e₹-R).
The RBI had launched the digital rupee’s first pilot on November 1 in the wholesale segment. RBI 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.”
It said that the pilot will cover select locations while announcing the operationalisation of the Central Bank Digital Currency-Retail (e₹-R) Pilot. It will be conducted with “closed user group (CUG)” which will include select participating customers and merchants.
The RBI will distribute the tokens through the banks. Users will be able to transact with digital rupee through a digital wallet which will be stored on mobile phones/devices. The digital wallet will be offered by the participating banks.
Both Person to Person (P2P) and Person to Merchant (P2M) transactions will be possible. The digital rupee will offer customers the features of “trust, safety and settlement finality” like physical cash, the RBI said.
"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," it added.
READ | From Falguni Nayar to Rekha Jhunjhunwala: 5 newcomers on Forbes Top 100 Richest Indians list
(With inputs from PTI)
