The Reserve Bank of India (RBI) said on Tuesday that the first pilot program for the retail digital rupee, often known as e-rupee or eâ1-R, will begin on December 1. 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.
“The closed user group (CUG), which consists of participating customers and retailers, would cover a few specific sites for the experiment. The e-R would take the shape of a digital token that stands in for money. It would be distributed in the same denominations that coins and paper money are now distributed in. It would be distributed by means of middlemen, such as banks, “in a statement, the RBI.
Users will be able to conduct transactions with e-R using a mobile-based digital wallet provided by the partner banks. Both person-to-person (P2P) and person-to-merchant (P2M) transactions are possible, according to the central bank.
What is an e-Rupee or digital 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.
E-Rupee or Digital Rupee Working Explained
The RBI emphasized that consumers and businesses will receive electronic rupees, or e-Rupees, through middlemen like banks. Through a digital wallet provided by qualified banks and kept on mobile phones or other devices, users would be able to conduct transactions using the e-Rupee.
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 an e-Rupee. “The eâ1-R would offer characteristics of actual money, such as trust, safety, and finality of settlement. Similar to cash, it won’t accrue interest and can be changed into other types of payment like deposits with banks.
Eligible Banks for Digital Rupee
The introduction of the digital rupee will take place in phases, according to the central bank. The pilot would initially commence 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 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.”
Since a long time ago, the RBI has discussed implementing the digital rupee, 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.
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