RBI to launch digital rupee on December 1: The Reserve Bank will launch the first retail digital rupee (e?) pilot on Thursday, December 1. The RBI said the pilot will test the robustness of the entire process of digital rupee creation, distribution and retail usage in real time.
Based on the experience gained from this pilot, different functions and applications of (e₹) tokens and architecture will be tested in future pilots.
Retail Digital Rupee Startup City
The central bank digital currency (CBDC) will be launched in Mumbai, New Delhi, Bengaluru and Bhubaneshwar on December 1, before expanding to nine more cities in an initial phase. This comes a month after the RBI started a pilot of the wholesale tranche of the digital rupee on November 1.
Retail Digital Rupee Launches Bank
The first phase of the retail digital rupee will start with four banks in four cities across the country – State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank.
What is a Digital Rupee (Central Bank Digital Currency – CBDC)?
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 main motivations for their issuance vary according to each country’s unique requirements.
(e₹) will take the form of digital tokens representing fiat currency. It will be issued in the same denomination as banknotes and coins currently issued. Digital rupees will be distributed through intermediaries (banks). The Indian government has announced the rollout of the digital rupee starting from the 2022-23 fiscal year in the federal budget to be tabled in Parliament on February 1, 2022.
Retail Digital Rupee Transactions
Users will be able to transact with (e₹) 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.
(e) Features of physical cash such as trust, security and settlement finality will be provided.
Retail Digital Rupee – More Banks Involved
Eight banks have been identified to participate in the pilot in stages. After State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank, four more banks — Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank — will join the pilot later.
Retail Digital Rupee – more cities will be added
The other nine cities that the pilot will later expand to are: Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Cochin, Lucknow, Patna and Shimla.
Digital Rupee – Concept Illustration
In a recent concept note on a central bank digital currency, the RBI said that CBDCs are intended to complement rather than replace current forms of money and envisage providing users with additional payment avenues rather than replacing existing payment systems. Globally, more than 60 central banks have expressed interest in a CBDC, some implementations of which are already being piloted in the retail and wholesale categories, and many others are researching, testing and/or launching their own CBDC frameworks.
(PTI input)