The Reserve Bank of India (RBI) launched the first pilot phase for the retail digital rupee on 1st December 2022. Let’s explore everything about it through this newsletter.
The Reserve Bank of India launched the country’s first Digital Rupee on 1 November 2022. RBI will start the first trial for ‘Retail Digital Rupee’ in four cities from 1st December 2022. The pilot phase has launched in Mumbai, Delhi, Bengaluru and Bhubaneswar.
RBI has selected eight banks for this pilot project. The first phase has started with the State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank. This test will involve both retail customers and merchants. Digital Rupee will be in the form of a digital token, which is legally valid. Its value will be equal to the current currency notes issued by RBI. Digital Rupee has been named Central Bank Digital Currency (CBDC).
RBI has divided digital currency into two categories. The first is wholesale currency, and the second is retail currency. The wholesale segment of the digital rupee in the pilot phase was made live on 1st November 2022.
Highlights of Retail Digital Rupee
The digital rupee will be used through a digital wallet. The banks which the RBI has selected will offer this wallet. This digital wallet will be in your smartphone. The central bank has mentioned that transactions can be both person-to-person and person to the merchant. Merchants can be paid using a QR code. This means that with retail digital rupees, you will also be able to buy items of daily needs like milk and vegetables. Along with this, money can also be transferred from person to person.
The holder of the digital rupee will not get any interest on the amount held, but it can be used for deposits with banks.
Which Cities Will be Included in the Second Phase?
Currently, the first phase is live. After getting feedback from the first phase, more banks and cities will be included in the second phase. Tentatively, there are plans to launch projects in cities like Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
According to the Reserve Bank of India, the digital rupee will help strengthen India’s digital economy and simplify the payment system. Dependence on cash will also reduce through digital currency.