RBI launches retail digital rupee in four cities | News Bharat

The Reserve Bank of India (RBI) on Thursday launched the first retail digital rupee pilot project in Mumbai, New Delhi, Bengaluru and Bhubaneshwar. The Digital Rupee for Retail (e?-R) project has been launched in a closed user group involving four banks — State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank — as well as partners for customers and merchants. The launch comes a month after the Reserve Bank of India (RBI) began its digital rupee pilot – wholesale on November 1, and the second phase of the retail digital rupee project will add nine new cities and four banks.

According to the RBI, e?-R is a form of digital token representing fiat currency that will provide “the characteristics of physical cash such as trust, security and finality of settlement.” “As far as cash is concerned, it does not earn any interest and can be converted into other forms of money, such as bank deposits,” the central bank said in announcing the pilot project on Nov. 29. In a press release on Thursday, Yes Bank said it launched RBI’s CBDC (Central Bank Digital Currency) for its closed user base, which includes retail customers and merchants. During the pilot phase, it added, Yes Bank Access to the Digital Rupee app will be provided to select retail customers of the bank who will be part of a closed user group.

A CBDC is a digital form of paper money issued by a central bank. While most central banks around the world are exploring the issuance of CBDCs, the primary motivation for their issuance varies according to each country’s unique needs. At the request of the banks, RBI will use the latest technology to create digital rupees and digitally issue them to the banks in a secure manner. Customers will be able to make digital rupee requests through the digital wallet in the mobile application provided by the bank, and the requested amount will be credited to their digital rupee wallet.

Users will be able to transact with e?-R through digital wallets provided by participating banks and stored on their phones/devices. Transactions can be person-to-person (P2P) and person-to-merchant (P2M). Payments to merchants can be made using the QR code displayed at the merchant’s location. Eight banks have been identified to participate in the pilot project in phases. After State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank, four more banks — banks Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank — will join the pilot project. The other nine cities that the pilot project will later expand to are Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Cochin, Lucknow, Patna and Shimla. The scope of the pilot program may be progressively expanded as needed to include more banks, users and locations, as per RBI rules. Last month, the RBI said the digital rupee-wholesale would help reduce transaction costs by pre-filling demand for settlement guarantee infrastructure or collateral used to mitigate settlement risks.

Also read: RBI launches four-tier regulatory framework for urban cooperative banks

The central government announced the rollout of the digital rupee starting from the 2022-23 fiscal year in the Union Budget to be tabled in Parliament on February 1, 2022. money, and envisions providing users with additional payment channels rather than replacing existing payment systems. Globally, more than 60 central banks have expressed interest in CBDCs, some implementations are already being piloted in the retail and wholesale categories, and many others are researching, testing and/or launching their own CBDC frameworks.

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