The Reserve Bank of India (RBI) on Tuesday (November 29) announced the launch of the first pilot for retail digital rupee on December 01, 2022.
The digital currency will be first launched in Mumbai, New Delhi, Bengaluru, and Bhubaneswar on December 1, and will later be expanded to nine more cities in the initial phase.
This follows a month after the RBI started a pilot in the digital rupee in the wholesale segment on November 1.
What is the digital rupee? The digital rupee would be in the form of a digital token that represents legal tender. "It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries ie banks," the RBI said while announcing the operationalisation of Central Bank Digital Currency (CBDC).
How will we use it? Users will be able to transact with the digital rupee through a digital wallet offered by the participating banks and stored on mobile phones and other devices. Transactions can be both Person to Person (P2P) and Person to Merchant (P2M).
Payments to merchants can be made using QR codes displayed at merchant locations.
Physical cash like trust: The digital rupee would offer features of physical cash like trust, safety, and settlement finality. "As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks," the RBI said.
Which other cities will get the digital rupee? After the launch in Mumbai, New Delhi, Bengaluru and Bhubaneswar on December 1, the other nine cities to which the pilot will be later extended are: Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
Banks where you can get them: Eight banks have been identified for phase-wise participation in the pilot project. After State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank, four more banks - Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank - will join the pilot.
Why do we need digital rupee? Last month, the RBI had said the digital rupee will help in reducing transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk, reported PTI.