RBI announces the digital Rupee launch on December 1
The digital rupee would soon be allocated in similar denominations as paper money and coins.
The digital rupee is finally going to become a reality as the RBI (Reserve Bank of India) has announced its launch. The RBI says the e-Rupee would be a digital token representing legal tender. It will first be released on a pilot basis for retail. However, it will only be available to some retail customers for now. The pilot would occur at select locations in a closed user group (CUG), including customers and merchants.
The digital rupee would be issued in similar denominations to paper money and coins. But how will it be achieved? One will get it through intermediaries like banks. People will also be able to transact with e-Rupee through a digital wallet that banks will offer. The payment process will be similar to the current scenario.
People can pay merchants using QR codes displayed at their locations, which is an easier way to exchange money. "E-Rupee will offer physical cash features such as trust, security and settlement firmness," RBI said. In the case of cash, the digital rupee will not earn any interest, but it can be converted into other forms of money, such as bank deposits.
The digital rupee will initially be available in just four cities, including Mumbai, New Delhi, Bengaluru, and Bhubaneswar. Later it will be available in cities like Hyderabad, Ahmedabad, Gangtok, Guwahati, Indore, Kochi, Lucknow, Patna and Shimla. The government says that the digital rupee will gradually expand to more bands, users and locations.
In addition, eight banks will participate in this pilot test. But, the first phase will only start with four banks, SBI, ICICI Bank, Yes Bank and IDFC First Bank. The rest of the four banks will join soon, including HDFC Bank, Bank of Baroda, Union Bank of India, and Kotak Mahindra Bank.