The Reserve Bank of India has announced the launch of the pilot project for retail digital rupee on December 1, 2022, informed RBI in an official press release.
According to the release, users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones and devices. The pilot would cover select locations in closed user groups (CUG) comprising participating customers and merchants. “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,” RBI noted.
RBI further informed about the transactions that 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 release informed.
The central bank informed that 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 would initially cover four cities, Mumbai, New Delhi, Bengaluru, and Bhubaneswar, and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
RBI had further stated that developing CBDC might provide the public with a risk-free virtual currency which will provide them with legitimate benefits without hazards associated with trading in private virtual currencies. It was further noted by the central bank that for all individuals, companies, governments, and other entities that can convert it into bank money or cash, CBDC will serve as a means of exchange, a kind of legal tender, and a reliable store of value. CBDC wants to make transactions faster and cheaper.