The Reserve Bank of India will launch the first pilot of retail digital Rupee (e ₹-R) on Thursday to assess the stability of the complete process of digital currency creation, distribution and retail usage in real time.
What is retail digital Rupee (e ₹-R) ?
1) According to the RBI, the e ₹-R is a digital token that serves as a legal tender. It would be issued in the same denominations that paper currency and coins are presently issued. It would be circulated through intermediaries.
2) Users will transact with e ₹-R through a digital wallet offered by the banks who are taking part in the initiative. The digital currency will be stored on mobile phones.
3) Transactions can be made in either person to person (P2P) or person to merchant (P2M). For payments to merchants, QR codes exhibited at merchant locations can be used, the central bank said.
4) Alike physical cash, this digital currency will offer trust, safety and settlement finality.
5) Also similar to cash, it will not earn any interest and can be converted into other forms of money as well as used for deposits with banks.
The RBI said that it has identified eight banks for phase-wise participation in this pilot. These include State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank. The four banks will participate in the first phase across 4 cities in the country. Four more banks, namely, Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot subsequently, the RBI said.