RBI to launch digital ₹ retail pilot on Dec 1

The Reserve Bank of India (RBI) on Tuesday announced it will start the trial for retail digital rupee (e₹-r) from December 1, with four banks in as many cities participating in a pilot programme that will give individuals the chance to use the central bank digital currency (CBDC) for the first time.

A CBDC can largely be considered the digital version of cash and the e₹ will have an equal value as the rupee. The advantage of CBDC over existing digital payment systems is that payments through digital currency would be final, without requiring interbank settlement, thereby bringing down transaction cost.

The RBI in a concept note issued on October 7 said it merely “takes a different form, exchangeable at par with the existing currency and shall be accepted as a medium of payment, legal tender and a safe store of value. CBDCS would appear as liability on a central bank’s balance sheet.”

In a press release on Tuesday, the central bank said the pilot will cover select locations in a closed user group (CUG) comprising participating customers and merchants.