India’s RBI to launch Digital Rupee pilot project on December 1

By Shilpa Annie Joseph, Official Reporter
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What is Indian digital currency
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The Reserve Bank of India (RBI) has announced the launch of the first pilot for retail digital rupee (e₹-R) on December 01, 2022.

The retail digital rupee, which is also known as Central Bank Digital Currency (CBDC), will be in the form of a digital token that represents legal tender. The RBI will issue digital currency in the same denominations that paper currency and coins are issued.

The retail eRupee will be potentially available for use by all the private sector, non-financial consumers, and businesses. Further, it will be able to provide access to safe money for payment and settlement, as it will be the direct liability of the central bank.

What is Indian digital currency

CBDC is more anonymous than traditional digital transactions. In CBDC, the core banking will have a one-time debit for currency purchase, but all subsequent transactions will move from wallet to wallet.

The central bank has identified eight banks for phase-wise participation in this trial. The pilot would cover select locations in a closed user group (CUG) comprising participating customers and merchants.

According to the statement, “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. 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.”

What is Indian digital currency

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 RBI said in a statement.

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 Central Bank added.

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