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Recent In News: The Reserve Bank announces the launch of the first pilot for retail digital Rupee (e₹-R) on December 01, 2022. Earlier RBI has started the pilot project for Central Bank Digital Currency-Wholesale (e₹-W) on November 1
What is Retail Digital Rupee (e₹-R)?
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.
Will the pilot project available across the country?
No, The pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants. The pilot would initially cover four cities, viz., Mumbai, New Delhi, Bengaluru and Bhubaneswar and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
How the users will be transacting the digital currency?
Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones/devices.
What are the types of Transactions will be available in e₹-R?
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 are the features of e₹-R?
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. This can be understood with an example: when we have money in Paytm wallet or Phonepe wallet, we don’t earn any interest.
What is the purpose of the pilot project?
The pilot project 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.
Which banks will be participating in the e₹-R?
Eight banks have been identified for phase-wise participation in this pilot. The first phase will begin with four banks, viz., State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in four cities across the country. Four more banks, viz., Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot subsequently. The scope of pilot may be expanded gradually to include more banks, users and locations as needed.
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e₹-R Is In The Form of A Digital Token...
