RBI to launch the first pilot of retail digital rupee

Key Takeaways:

  • The much-anticipated Central Bank Digital Currency (CBDC), will be available to retail users starting on December 1, stated the Reserve Bank of India.
  • Digital tokens will at first be granted in the same denominations as paper currency by four banks in four cities.

On Tuesday, the Reserve Bank of India (RBI) announced the beginning of the retail digital rupee (e-R) pilot programme.  The  date for commencing  of the pilot is decided to be December 1.

According to a press release from RBI, the pilot would focus on a few locations within a closed user group (CUG), which would include partaking patrons and business owners.

State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank will be the initial four banks to participate in the pilot, out of the eight that have been recognised for progressive involvement.

According to a press release from the central bank, four additional banks — Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank — will soon join this pilot.

On December 1, the Reserve Bank will begin the first sequence of the retail digital rupee (e-R) pilot program in Mumbai, New Delhi, Bengaluru, and Bhubaneswar. Thereafter, the programme will be expanded to nine additional cities.

When considered necessary, the pilot’s range may be significantly expanded to include additional banks, users, and locations. The plan for federal advancement also includes Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.

The pilot will test the stability of the whole creation, distribution, and retail use of digital rupees instantaneously. Based on the lessons learned from this pilot, various aspects and uses of the e-R token and architectural style will be evaluated in subsequent pilots.

The e-R would take the shape of a digital token that stands in for money. It would be distributed in the same denominations that coins and paper money are now distributed in. It would be distributed by means of middlemen, namely banks.

Through a digital wallet provided by the banking institutions (participant banks) and kept on mobile phones or other devices, users will be able to conduct transactions with e-R. Both person-to-person (P2P) and person-to-merchant transactions are possible (P2M).

Payments made using CBDC would be final and not require interbank settlement, giving it an edge over current digital payment systems.

The e-R would provide characteristics of actual money, such as trust, safety, and settlement finality. As with cash, it won’t bear interest and can be changed into other forms of payment like bank deposits, according to the RBI.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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