The RBI has launched its digital rupee pilot project ‘E-Rupee’ today, December 1, 2022. The phase-wise initiation of the digital rupee project will include eight major banks of India. While the first phase will have banks that include SBI, ICICI Bank, Yes Bank and IDFC First Bank, four other banks – Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank, will be included in the time to come.
In an official release, the RBI said that the currency will be representation legal tender but will be available to people in the form of a digital token. Unlike cryptocurrency, the Digital Rupee will be issued in the same denominations as the paper currency.
“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 press release further read.
The pilot project will cover locations in four cities – Mumbai, New Delhi, Bengaluru and Bhubaneshwar. The project will then see an expansion to cities like Ahmedabad, Guwahati, Hyderabad, Indore and more.
The Digital Rupee can be converted into other forms of money, like bank deposits.
The Facts of the Matter
With an internet penetration rate of 47 percent of the total population, and fifth lowest Internet data rates in the world, India and its citizens are bracing itself for an all-digital-economy. Thanks to the advent of UPI, many Indians have already gotten the hang of transacting and purchasing services without cash or plastic money.
On December 1, the RBI has launched its ‘E-Rupee’, part of the Digital Rupee pilot project and we have got the answers you all the questions you may have.
What is E-Rupee?
As per the Reserve Bank of India, e-rupee will be a digital form of the Indian rupee already in circulation.
“It was recommended to amend the RBI Act to cover e₹ in the definition of the term ‘bank note’ and also insert a new section in the RBI Act covering features pertaining to e₹ along with necessary exemptions. As the extent and scope of such pilot launches expand, RBI will continue to communicate about the specific features and benefits of e₹, from time to time,” the RBI in its concept note said.
Which Banks Are Included in Scope of E-Rupee?
In the first phase of the Digital Rupee Pilot Project, four banks will be inducted – State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank. The pilot will go on to include four other banks – Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank.
Which Cities Will Be Included in the E-Rupee Pilot?
Not all the cities across the nation will be included in the pilot project initially. The first phase of the digital rupee pilot project will cover four cities – Mumbai, New Delhi, Bengaluru and Bhubaneswar. In the later phases, the following cities will be covered – 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 in its press release said.
How Will E-Rupee Function?
The e-rupee will be distributed through the above-mentioned banks. Customers of the banks will be able to transact with their e₹-R through a digital wallet offered by the banks, which would be connected to their phones. As for the transactions, they can be both Person to Person (P2P) and Person to Merchant (P2M). Like UPI, customers can make payments to merchants using QR codes on the merchant locations.