Digital Rupee Launch: Key features and all you need to know about RBI's digital currency

Digital Rupee Launch: Reserve Bank of India (RBI) has launched the first pilot for retail digital Rupee (e₹-R) today, December 1. 

In this pilot program RBI will test the robustness of the entire process of digital rupee creation, distribution and retail usage in real time. Different features and applications of the e₹-R token and architecture will be tested in future pilots, based on the learnings from this pilot.

The pilot would cover select locations in a closed user group (CUG) comprising participating customers and merchants.

The pilot program will initially cover four cities– Mumbai, New Delhi, Bengaluru and Bhubaneswar and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. 

Eight banks have been identified for phase-wise participation in this pilot. The first phase will begin with four banks, viz., State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in four cities across the country. Four more banks, viz., Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot subsequently. 

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What is digital rupee?

Digital rupee, also known as Central Bank Digital Currency (CBDC), is a digital form of currency notes issued by a central bank. It is substantially not different from banknotes, but being digital it is likely to be easier, faster and cheaper. It also has all the transactional benefits of other forms of digital money.

Key Features of retail digital rupee 

Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones / 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.

The e₹-R would offer features of physical cash like trust, safety and settlement finality. 

As in the case of cash, e₹-R will not earn any interest and can be converted to other forms of money, like deposits with banks.

Digital Rupee will help get rid of the problem of fake currency.

The cost of printing paper notes will be saved.

Digital currency will always be there after it is issued.

CBDC cannot be damaged.

How does it work?

Similar to checking the bank balance, one can check the balance in the wallet. CBDC will be based on blockchain technology. Individuals will be able to pay it to whomever they want to pay through QR code and it will reach their account.

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