The retail digital rupee will be introduced on December 1 as part of a pilot programme, the Reserve Bank of India (RBI) stated in a statement today (29 November).
According to a statement from the central bank, eight institutions have been invited to participate in the trial in stages.
A digital token that stands in for legal money is the retail digital rupee or e₹-R. According to the RBI, it would be offered in the same denominations as coins and paper money.
How Digital Rupee will be Distributed?
e-Rupee will be distributed to clients and merchants via intermediaries such as banks. Users will be able to conduct e-Rupee transactions using a digital wallet provided by approved banks and kept on mobile phones or devices.
Digital Rupee Pilot Kickstarts
The Digital Rupee pilot program will begin in four banks and four locations, including Mumbai, New Delhi, Bengaluru, and Bhubaneswar. The banks include SBI, ICICI Bank, Yes Bank, and IDFC First Bank. Four additional banks, including Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank, will eventually join this pilot program, and it will be expanded to additional cities, including Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
India will so join the ranks of nations that have implemented Central Bank Digital Currency (CBDC).
What is CBDC?
The Central Bank Digital Currency is a digital form of legal money issued by a country’s central bank.
“It is similar to sovereign paper currency but has a distinct shape. It will be accepted as a means of trade, legal tender, and a secure store of value. According to the RBI, CBDCs would appear as a liability on a central bank’s balance sheet.
How Digital Rupee Transactions Work?
The central bank also announced that digital Rupee transactions can occur between Person to Person (P2P) and Person to Merchant (P2M) (P2M). Similarly to online purchases, users will be able to make payments with e-Rupee using QR codes displayed at merchant locations. “The e-Rupee would include attributes of real currency, such as trustworthiness, security, and settlement finality. As with cash, it will not accrue interest and can be converted into other types of money, such as bank deposits, according to an official RBI release.
