The Reserve Bank of India announced the launch of the first pilot for retail digital Rupee (e₹-R) on December 1. The apex bank previously said on October 31 that the pilot would start in a month.
The production, distribution, and real-time retail use of digital rupees will all be put to the test during the pilot, according to the RBI. Future pilots, which will be built on the lessons learned from this pilot, will test other aspects and applications of the token and architecture.
According to the RBI, a closed user group made up of participating customers and retailers would use the test programme at a few selected sites. It stated that the e₹-R would take the shape of a token that stands in for legal money. The coin and paper money denominations would be the same as those already in use.
It said that banks will act as intermediaries in the distribution of e₹-R. Users would be able to exchange digital rupees for goods and services from one person to another or from one person to a merchant using a digital wallet provided by partner banks and kept on mobile devices. Merchant websites will display QR codes that can be used to make payments to them.
It is important to note that e₹-R can be changed into other currencies, such as bank deposits. No interest will be paid on it.
Eight banks have been identified to take part in this pilot, although the first phase will only involve four banks in four locations throughout the nation: State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank.
Four additional banks will later join this trial, including 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 be added. Cities and additional banks could be added progressively.