The Reserve Bank of India said on Tuesday that retail digital rupee rbi (eRs-R) would be introduced on December 1 as a pilot programme. The pilot would cover a few sites in a closed user group (CUG) made up of participating customers and merchants, according to a statement from RBI. The main objective of the implementation of digital rupees is the steady phase-out of paper money, which would reduce the expense of managing and carrying paper money. The Digital Rupee rbi , often known as e-Rupee, is not a cryptocurrency and is not based on the Blockchain. Bank of America A digital version of cash or paper money is known as digital currency (CBDC). This implies that the value of the paper rupee and the digital rupee is equivalent. In four cities—Mumbai, New Delhi, Bengaluru, and Bhubaneswar—four banks—State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank—have begun the Digital Rupee rbi Pilot Program. The RBI will add four more institutions to the collaboration when the testing phase starts: Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank. The programme will be extended to more cities in the following days. In the second phase, digital rupees will be available in a number of cities, including Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla. You can learn everything about digital currency right here. What is retail Digital Rupee RBI ? The Reserve Bank of India thinks that because the retail digital rupee rbi is a direct liability of the central bank, it can offer access to safe money for payment and settlement. Retail CBDC is, to put it simply, an electronic version of cash that is mostly used for retail transactions. The retail digital rupee’s presentation: The Reserve Bank of India released a concept note on October 7, 2022, which states that the central bank has suggested a token-based tiered architecture approach for the retail digital rupee rbi. Similar to banknotes, a token-based CBDC is assumed to belong to whoever is holding it. In a CBDC that uses tokens, the recipient of a token will confirm that it truly belongs to him. As it would be more similar to actual money, “a token-based CBDC is considered as a preferred option for CBDC-R,” the RBI previously stated. Who will issue and manage the retail digital rupee rbi? According to the concept note, a two-tier distribution mechanism is suggested for the retail digital rupee rbi. The distribution and payment services will be handled by the banks, while the Reserve Bank of India would issue and redeem e-R. The model is comparable to the current physical currency management system where banks are in charge of managing tasks like issuing notes to the general public, maintaining accounts, adhering to know-your-customer (KYC) and anti-money laundering and countering the financing of terrorism (AML/CFT) checks, transaction verification, etc. Which banks and cities are taking part in the pilot programme for retail digital rupees? Eight banks have been chosen to take part in four cities throughout the nation’s retail pilot of the digital rupee in stages. Four banks—State Bank of India, ICICI Bank, YES Bank, and IDFC First Bank—will participate in the test launch in the first phase. Following that, this pilot will include four more banks: Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank. In the beginning, the pilot will only be available in Mumbai, New Delhi, Bengaluru, and Bhubaneswar. Later, it spread to Shimla, Hyderabad, Indore, Kochi, Lucknow, Gangtok, and Patna. Customers and retailers will currently be able to utilise the e-rupee or digital rupee in the CUG in these cities. Additionally, the retail e-Rupee will be fungible with other currencies. The goal is to transition to a cashless society and give consumers the same rights they have with cash, but mostly through digital means. According to RBI, “the pilot’s scope may be gradually expanded to include additional banks, users, and locations as required.” Can you use retail digital rupee rbi ? The closed user groups (CUG) that the retail e-R pilot project will cover comprise both customers and business owners. According to RBI’s prior concept note, all firms, consumers, including consumers outside of the financial sector may be able to use the retail digital rupee rbi. How to use e₹-R? The same denominations that are currently used for paper money and coins will also be used for the e-R. Through a digital wallet provided by the participating banks and kept on mobile phones or other devices, users will be able to conduct transactions with e-R. “In the pilot, customers will be able to construct a wallet containing digital e-R tokens and use it for a variety of transactions or use cases with specific institutions. The e-R would be compatible with current bank accounts and will function as legal tender supported by the central bank “Mihir Gandhi, Partner and Leader – Payment Transformation, PwC India, said. Both person-to-person (P2P) and person-to-merchant (P2M) transactions are compatible with e-R for. Customers can use the QR codes displayed at merchant locations to pay for goods and services. Keep in mind that the retail digital rupee rbi can be converted to other currencies, such as bank deposits, but it will not accrue any interest. “Payments that are affordable, secure, and simple for all” “RBI CBDC seeks to deliver on the promise of accessible, secure, and easy payments for everyone. The CBDC would result in more strong and dependable payments, reducing the dependence on cash, because it offers a regulated alternative to cryptocurrencies in the market. Because of the underlying technology, transaction costs would be low. It will complete the mobile payments ecosystem by complementing current methods like UPI and being compatible with other payment systems, according to Jaya Vaidhyanathan, CEO of RegTech company BCT Digital. Types of CBDC to be issued The general purpose or retail (CBDC-R) and wholesale types of central bank digital currency exist. “CBDC can be categorised into two major forms, namely general purpose