The Reserve Bank of India (RBI) vide press release dated November 29, 2022, announced that it would be launching the first pilot for retail digital rupee (e₹-R) from December 1, 2022. This announcement has been notified pursuant to RBI’s previous press release dated October 31, 2022 wherein RBI announced the commencement of the first pilot for wholesale digital rupee and further notified that it would be launching the e₹- R in the next month.
The press release clarifies that the e₹- R would represent legal tender in the form of digital token and would be issued in the same denomination as the paper currency and coins. Furthermore, transactions with regards the e₹- R would be facilitated through wallets that will be offered by the participating banks. The pilot launch has been bifurcated into two phases- the first phase shall observe the participation of four banks viz State Bank of India, ICICI Bank, Yes Bank and IDFC Bank; the second phase shall extend the operations of the pilot launch to Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank, with the scope of the launch further extending to other banks.
Also, the RBI has decided to make the initial launch of the e₹- R in select states i.e. Mumbai, New Delhi, Bengaluru and Bhubaneswar which would later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla (with the scope of extending the launch to other locations). The aim of a bifurcated launch is to cover select locations in closed user groups (CUG) that would include participating customers and merchants.
Some of the interesting features of the e₹- R are that it permits both Person to Person (P2P) and Person to Merchant (P2M) transactions. Furthermore, the digital rupee, as opposed to cash, would not earn any interest and can be converted to other forms of money.
Through the launch of the digital rupee in the retail segment, the RBI aims to test the ‘robustness of the entire process of digital rupee creation, distribution and retail usage in real time’.