On December 1, the Reserve Bank of India will launch the pilot for the retail digital rupee, allowing customers to conduct transactions using the digital rupee through a digital wallet made available by participating banks and held on mobile phones or other devices.
The digital rupee, which is primarily used by banks to settle secondary market transactions in government securities, was introduced for the wholesale market on November 1. Meanwhile, users may use the retail version of virtual money to conduct regular transactions.
The token-based system for retail, as stated by the RBI, is better suited for everyday retail consumers, both for one-on-one interactions between individuals and with certain merchants that are initially to be utilised inside the chosen closed group.
Cities covered under the first pilot project
The initial phase of the retail digital rupee pilot project will focus on specific cities and banks. RBI has also stated that the closed user group (CUG), which consists of participating customers and merchants, will have access to digital money during the project.
Beginning December 1, 2022, residents of Mumbai, New Delhi, Bengaluru, and Bhubaneswar will be able to conduct transactions with e-rupee using a digital wallet provided by partner banks and maintained on mobile phones / devices. Nine other cities will eventually be included in the later part of the trial.
The pilot will later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla, the official report stated.
The four top cities have been rightly chosen for the pilot launch keeping in view the sufficient availability of customers well-versed in digital transactions usage in these cities. Based on the learnings from the pilot launch further improvement and sophistication are expected with wider coverage by leveraging the strong digital infrastructure of the nation by RBI.
Banks covered under the first pilot project
Four banks—State Bank of India, ICICI Bank, Yes Bank, and IDFC Initial Bank—will launch the first phase in four different cities throughout the nation. The central bank announced that eight banks have been chosen to take part in this trial project in phases.
Following the successful trials in these 4 banks, this pilot will include participation from four other banks namely Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank. The digital rupee can be used by consumers and business owners who live in the aforementioned cities and have accounts with the above-mentioned banks.
If all goes according to plan, the RBI has also stated that the digital rupee pilot would eventually be expanded to other banks and locations. All private sector, non-financial customers, and enterprises will be allowed to use the e-rupee, which is an electronic equivalent of currency.
This type of digital currency will mostly be utilised for retail purchases. The e-rupee will be able to provide access to secure funds for payments and settlement since it will be directly liable to the central bank.