The Reserve Bank of India has announced that the first pilot for retail digital rupee (e₹-R) will be launched on December 1.
The pilot will cover select locations in a closed user group (CUG) comprising participating customers and merchants. The e₹-R will be in the form of a digital token that represents legal tender. It will be issued in the same denominations that paper currency and coins are currently issued. It will be distributed through banks.
Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones/devices. Transactions can be both person-to-person (P2P) and person to the merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations. The e₹-R offers 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.
Eight banks have been identified for phase-wise participation in this pilot. The first phase will begin with four banks — State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in four cities across the country. Four more banks — Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank will join this pilot subsequently. The pilot will initially cover four cities — Mumbai, New Delhi, Bengaluru, and Bhubaneswar and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.