RBI all set to launch pilot of retail digital rupee in December

The pilot launch of retail digital rupee (e₹-R) by the Reserve Bank of India (RBI) will take place on December 1.

The RBI, in an official release mentioned that the currency would be in the form of a digital token that represents legal tender.

The statement also said that alike paper currency and coin, digital currency would be issued in the same denominations.

It further noted that the pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants.

The digital currency will be issued through banks. The users will be able to transact through a digital wallet offered by the participating banks and stored on mobile phones/devices, the RBI said.

However, as in the case of cash, the digital currency will not earn any interest and can be converted to other forms of money, like deposits with banks.

The central bank also said that transactions through e₹-R can be both person to person (P2P) and person to merchant (P2M).

Eight banks have been selected for phase-wise participation in this pilot. The banks are State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank. The four banks will participate in the first phase across 4 cities in the country.

Another four more banks like Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot subsequently, the RBI said.

"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," the central bank said.