Digital Rupee launched on Dec 1, here is what you need to know
- Digital Rupee launched on Dec 1 by RBI as a pilot program.
- Initially RBI has partnered with four banks for this pilot launch of the Digital Rupee.
- These four banks are: State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank
- The experiment will initially only apply to the closed user group (CUG), which consists of participating consumers and retailers
The first pilot for retail use of the digital rupee, or e-rupee, began on December 1, according to a statement from the Reserve Bank of India (RBI).. To begin with, the RBI has partnered with four banks in Mumbai, New Delhi, Bengaluru, and Bhubaneswar: State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank. According to RBI, the experiment will initially only apply to the closed user group (CUG), which consists of participating consumers and retailers.
Lets Understand Digital Rupee or e-Rupee
The e-Rupee is a type of digital token that stands in for legal money, according to the RBI. The digital Rupee is issued in the same denominations as paper money and coins, unlike other cryptocurrencies.
How does a digital rupee operate?
The RBI emphasized that consumers and businesses will receive electronic rupees, or e-Rupees, through middlemen like banks. Through a digital wallet provided by the qualified banks and kept on mobile phones or other devices, users would be able to conduct transactions using e-Rupee.
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The central bank further clarified that both person-to-person (P2P) and person-to-merchant transactions in digital rupee are possible (P2M). Users will be able to conduct online-like transactions utilizing QR codes displayed at merchant locations to pay using e-Rupee. “The e-Rupee would give characteristics of actual money, such as trust, safety, and finality of settlement. It can be turned into other forms of money, such bank deposits, but it won’t pay any interest, much like cash, according to the official RBI announcement.
The pilot would examine the “robustness of the entire process of creating, distributing, and using digital rupees at retail in real-time,” according to information provided by RBI. Based on the lessons learned from this pilot, other aspects and uses of the e-Rupee token and architecture will be examined in further pilots.
List of banks and cities joining the pilot
Digital Rupee launched on Dec 1 would initially pilot with four banks in only four locations for the first phase: State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank. Mumbai, New Delhi, Bengaluru, and Bhubaneswar are among these cities. The pilot will now include four additional institutions, including Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank, according to the RBI.
The service will eventually be expanded to a large number of additional Indian cities, including Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla. The facility will eventually spread to other regions of the nation. The official rollout’s timeline hasn’t been made public yet. According to RBI, “the pilot’s scope may be gradually expanded to include other banks, users, and locations as necessary.”
RBI has been discussing implementing the digital rupee for a while now, and as of December 1, some users will be able to conduct transactions using the e-Rupee. The central bank’s overarching goal with the digital Rupee is to carry out a full-fledged launch of the CBDC (central bank digital currency) in the not-too-distant future.
