Operationalization of Central Bank Digital Currency – Retail (e₹-R) Pilot
The Reserve Bank announces the launch of the first pilot for retail digital Rupee (e₹-R) on December 01, 2022. It may be recalled that RBI had, in a Press Release dated October 31, 2022, indicated that the pilot in e₹-R would commence in a month’s time.
2. The closed user group (CUG), which consists of participating customers and retailers, would cover a few specific regions in the trial. The e-R would take the shape of a digital token that stands in for money. It would be distributed in the same denominations that coins and paper money are now distributed in. It would be spread by means of middlemen, namely banks.
Through a digital wallet provided by the participating banks and kept on mobile phones or other devices, users will be able to conduct transactions with e-R. Both person-to-person (P2P) and person-to-merchant transactions are possible (P2M). QR codes that are displayed at retail places can be used to make payments to retailers.
The e-R would provide characteristics of actual money, such as 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.
3. The real-time pilot will evaluate the sturdiness of the complete creation, distribution, and retail use of digital rupees. Based on the lessons learned from this pilot, other aspects and uses of the e-R token and architecture will be evaluated in further pilots.
4. Eight banks have been chosen to take part in this pilot project in phases. Four banks—State Bank of India, ICICI Bank, Yes Bank, and IDFC Initial Bank—will launch the first phase in four locations throughout the nation. Following the initial four banks, this pilot will also include the Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank. Mumbai, New Delhi, Bengaluru, and Bhubaneswar would be the first four cities the pilot would cover.
Later, Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla would also be included. As needed, the pilot’s scope may be gradually expanded to cover additional banks, users, and locations.