RBI to launch first pilot for retail digital rupee on December 1; SBI, ICICI Bank and six other banks identified for participation

The Reserve Bank of India will launch the first pilot for retail digital Rupee (e₹-R) on December 1, 2022, it said on Tuesday.

"The pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants. The e₹-R would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks," the RBI said in a statement.

Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones. Transactions can be both Person to Person (P2P) and Person to Merchant (P2M), the central bank said.

Payments to merchants can be made using QR codes displayed at merchant locations.

RBI has also selected eight banks for phase-wise participation in this pilot. The first phase will begin with four banks - State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in four cities. Later, Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot.

The pilot will initially be rolled out in Mumbai, New Delhi, Bengaluru and Bhubaneswar. It will be extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. The scope of pilot may be expanded gradually to include more banks, users and locations as needed, the RBI said.

RBI Governor Shaktikanta Das had earlier this month said that the RBI will follow up on the wholesale e-rupee pilot with a similar trial on the retail side this month itself.

The broader wish of the RBI is to execute a full-fledged launch of the CBDC "in the near future", Das said, choosing not to share a timeline for the same.

"I don't want to give a target date by which time the CBDC will be launched in a full-scale manner because this is something where we have to proceed very carefully. This is the first time the world is doing it. We don't want to be in a great hurry," he said.

There will be some technological challenges, some process challenges and the RBI will want to iron out all those aspects and introduce the CBDC in a manner that is non-disruptive, he said.

The central bank today said the pilot 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.