India to Commence Pilot Program for Its Retail Digital Rupee on December 1

The Reserve Bank of India (RBI), the nation’s central bank, announced today it will be commencing the first pilot for its retail digital rupee on Thursday, December 1, 2022.

The initiative was first disclosed by the bank last month. At the time, RBI stated that the retail testing will follow the wholesale e-rupee pilot segment, which commenced earlier this month. 

According to RBI, the pilot program for its retail digital rupee will cover select locations in a closed user group (CUG) comprising participating customers and merchants.

“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 central bank said.

The bank noted that users will be able to transact e-rupee via a digital wallet provided by the participating banks and stored on mobile devices. RBI added that the transactions can come either in the form of Person (P2P) or Person to Merchant (P2M). 

Payments to merchants can be executed using QR codes available at merchant locations, according to the bank.

“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, RBI said.

Eight Banks to Participate 

RBI said it had selected eight banks to participate in the pilot program, with the first phase beginning with four banks in four cities across the country with plans to extend to more cities.

The selected banks include State Bank of India, ICICI Bank, Yes Bank, IDFC First Bank, viz., Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank.

The central bank concluded that “the scope of the pilot may be expanded gradually to include more banks, users, and locations as needed.”

India Supports E-Rupee, Not Crypto

While India has been pushing for the development of its own digital rupee, the country has continued to maintain a hostile stance towards crypto. 

In recent times, the country has taken several steps to slow the growing use of crypto through taxation and capital gains provision.