RBI Digital Rupee: The retail pilot of the Reserve Bank of India’s (RBI) digital currency has gone live on 1 December 2022. RBI’s Central Bank Digital Currency (CBDC) known as E-Rupee or Digital Rupee is an electronic form of sovereign currency.
What is Retail E-Rupee: RBI Digital Rupee
The Reserve Bank of India believes that retail digital rupee can provide access to safe money for payments and settlements, as it is a direct liability of the central bank. Simply put, a retail CBDC is an electronic version of cash primarily for retail transactions.
CBDC which is also known as Retail Digital Rupee or E-Rupee is equivalent to the currently running currency. Or simply understand that it will be in the form of a digital token that represents legal tender. It will be issued in the same denominations as paper currency and coins are issued at present.
What will the retail digital rupee look like : RBI Digital Rupee
According to the note issued by the Reserve Bank of India on 7 October 2022, the central bank has proposed a token based tiered architecture model for retail digital rupee. Token-based CBDCs are similar to banknotes, meaning that whoever holds them is considered their owner. In a token based CBDC, the recipient of the token will verify that his/her ownership of the token is genuine.
Who will issue and manage e-rupee | RBI Digital Rupee
According to the concept note of the Reserve Bank of India, it is proposed to distribute the retail digital rupee through a two-tier model. Reserve Bank of India will issue and redeem e₹-R. Whereas, delivery and payment services will be handed over to the banks. This model is similar to the current physical currency management system, in which banks manage activities such as distribution of notes to the public, account-maintenance, and compliance with related requirements.
This bank and city are included in the pilot program | RBI Digital Rupee
Eight banks have been selected for phased participation in the retail pilot of 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 are participating in the pilot launch. Four other banks Union Bank of India, Bank of Baroda, HDFC Bank and Kotak Mahindra Bank will later join the pilot.
The pilot program will initially cover four cities Mumbai, New Delhi, Bengaluru and Bhubaneswar. Later it will be expanded to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
Who will use the digital rupee | RBI Digital Rupee
According to RBI, the pilot program of Retail Digital Rupee will cover select locations in Closed User Groups (CUGs), which will include customers and merchants. The retail digital rupee is potentially available for use by all private sector, non-financial consumers and businesses.
How to use retail digital | RBI Digital Rupee
The retail digital rupee will be issued in the same denominations in which paper currency and coins are currently issued. Users will be able to transact with retail digital rupee through digital wallets offered by banks participating in the pilot program and stored on mobile phones or devices. Transactions can happen both Person to Person (P2P) and Person to Merchant (P2M). Payments can be made to merchants using the QR code at merchant establishments.
Secure and easy payment | RBI Digital Rupee
Jaya Vaidyanathan, CEO of regtech company BCT Digital, said that the goal of RBI CBDC is to fulfill the promise of cheap, secure and easy payments for all. Retail Digital Rupee provides a regulated alternative to cryptocurrencies in the market. So CBDCs are on the way to more robust and reliable payments to reduce the dependence on cash.