The Reserve Bank of India's (RBI) first pilot project for retail digital Rupee (e₹-R) would be launched on December 1, 2022. The pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants, a statement issued by 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 would be distributed through intermediaries, i.e. banks. Eight banks have been identified for phase-wise participation in this pilot project.
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 namely 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.
How does e₹-R work?
Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones or devices, the statement 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 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.
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 scope of pilot may be expanded gradually to include more banks, users and locations as needed, the statement added.
(With inputs from IANS)