RBI launches digital rupee pilot project: know all about it
On Thursday, the Reserve Bank of India (RBI) issued Rs 1.71 crore to four participating banks based on their indents as part of the Central Bank Digital Currency (CBDC) retail segment pilot programme.
While the pilot was launched with Rs 1.71 crore in digital currency, sources added that the token indent and issuances to banks will continue to evolve dynamically based on user demand and bank liquidity requirements. As the demand from banks increases over the following few days, the central bank will produce more digital rupee.
What is digital rupee or e-rupee?
According to the RBI, the e-Rupee is a sort of digital token that can be used as legal tender. In contrast to other cryptocurrencies, the digital Rupee is minted in the same denominations as coins and paper money.
How will e-rupee work?
The RBI emphasised that middlemen like banks will be used to distribute electronic rupees, or e-Rupees, to consumers and companies. Users are allowed to carry out e-Rupee payments through a digital wallet offered by the eligible banks and kept on smart phones or other devices.
The Central Bank Digital Currency further confirmed that both person-to-person (P2P) and person-to-merchant transactions in digital rupee are possible. Just like online transactions, users will be able to pay with e-Rupee by scanning QR codes posted at retail locations. The e-Rupee would have attributes of real money, such as trust, safety, and finality of settlement. According to the official RBI release, it can be converted into other kinds of payment, such as bank deposits, but it won't accrue interest, much like cash.
According to information provided by the RBI, the pilot will test the "robustness of the entire process of creating, dispersing, and utilising digital rupees at retail in real-time." Other features and applications of the e-Rupee token and architecture will be investigated in subsequent pilots in light of the lessons learnt from this one.
Where initially e-rupee service will be used ?
The introduction of the digital rupee will take place in stages, according to the Central Bank Digital Currency. The trial will first commence with four banks in just four locations, including the State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank. Mumbai, New Delhi, Bengaluru, and Bhubaneswar are some of these cities. Future plans call for the addition of four more institutions to the pilot program, including Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank.
Later, the service would be expanded to many more Indian towns, including Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla. Other locations of the nation will eventually get access to the facility. The formal rollout's timetable has not yet been made public. According to RBI, the pilot's scope might be gradually expanded to cover more institutions, users, and locations.
A few customers will be able to conduct payments using e-Rupee as of December 1. The RBI has been discussing the introduction of the e-Rupee for a while. A larger goal of the Central Bank Digital Currency is to implement the CBDC fully in the near future using the e-rupee.
