Finally, the retail pilot of the RBI’s digital retail rupee app went live on December 1, 2022. Touted as the e-Rupee or digital rupee, the RBI’s central bank digital currency (CBDC) is an electronic form of Indian currency.
Here’s all you need to know about the retail pilot launch of RBI’s digital rupee, according to the CBDC notifications issued on October 7 and November 29, 2022.
Retail digital rupee can provide access to safe money for payment and settlement as it is a direct liability of the central bank, believes the Reserve Bank of India. Simply put, retail CBDC is an electronic version of cash primarily meant for retail transactions.
How will the digital retail rupee look?
The central bank has proposed a token-based tiered architecture model for the retail digital rupee, according to the concept note released by the Reserve Bank of India on October 7, 2022. A token-based CBDC is similar to banknotes which means whoever holds it is presumed to own it. In a token-based CBDC, the person receiving a token will verify that his ownership of the token is genuine. “A token-based CBDC is viewed as a preferred mode for CBDC-R as it would be closer to physical cash,” RBI earlier mentioned.
Who will issue and manage the retail digital retail rupee?
The retail digital rupee is proposed to be distributed through the two-tier model, according to the concept note. The Reserve Bank of India will issue and redeem e₹-R while the distribution and payment services will be delegated to the banks. The model is similar to the current physical currency management system wherein banks manage activities like distribution of notes to the public, account-keeping, adherence to requirements related to know-your-customer (KYC) and anti-money laundering and countering the terrorism of financing (AML/CFT) checks, transaction verification, etc.
Which banks and cities are participating in the digital retail rupee pilot program?
Eight banks have been identified for phase-wise participation in the retail pilot of the digital rupee in four cities across the country. In the first phase, four banks including State Bank of India, ICICI Bank, YES Bank, and IDFC First Bank will take part in the pilot launch. Four more banks — Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank will join this pilot subsequently.
The pilot will initially cover four cities — Mumbai, New Delhi, Bengaluru, and Bhubaneswar. It will later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
Currently, customers and merchants in the CUG in these cities will be able to use the e-rupee or digital rupee. “Retail e-Rupee will also enjoy fungibility with other forms of money. The idea largely is to move towards a cashless society and to provide the same privileges to end users that they enjoy with cash but largely in a digitized manner,” said Mayank Goyal, Founder, and CEO, of moneyHOP.