Here are some other things you should know about RBI’s digital rupee, which aims to completely replace paper and metal money.
Retail Digital Rupee: What is it?
A retail digital rupee is an electronic form of currency designed primarily to be used for retail transactions. According to RBI, the retail digital rupee will be in the form of a digital token that represents legal tender. Because it is a direct liability of the central bank, it can provide access to safe funds for the purpose of payment and settlement.
Retail Digital Rupee: How it can be used?
It is possible to use retail digital money through a digital wallet, mobile phone or other compatible electronic device to conduct online transactions. Its value will be similar to that of traditional currency. Transactions can be Person to Person (P2P) and Person to Merchant (P2M).
RBI noted that merchants can make payments using the QR code displayed at merchant locations. The retail digital rupee will provide features of physical cash such as trust, security and finality of settlement. In case of cash, it will not earn any interest and can be converted into other forms like bank deposits. More information about this will be revealed soon.
Retail Digital Rupee: Which Banks And Cities Are Piloting?
According to RBI, a total of eight banking firms have been selected to participate in this pilot program in a phased manner. The initial step will involve the participation of four banks in four locations nationwide. These institutions will be State Bank of India (SBI), ICICI Bank, Yes Bank and IDFC First Bank. In the next period, additional four banks, namely Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank, will participate in the programme.
The pilot program will focus on four cities – Mumbai, New Delhi, Bengaluru and Bhubaneswar. Subsequently, it will be expanded to include Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
Retail Digital Rupee: What is the objective of the pilot programme?
The pilot will test how robust the entire process of creating digital rupees, distributing them and using them at retail will be in real time. Based on the learnings from this pilot, future pilots will test different features and uses of the ER token and architecture.