On the first of December, India will embark on the first pilot for retail digital currency. This announcement came from the Reserve Bank of India (RBI) on Tuesday. The test will evaluate the creation and distribution of an e-rupee and will be done with an esoteric group of customers and merchants. It also follows a month after the apex bank began evaluating a wholesale digital currency.
The initial phase of the pilot will see the participation of four local banks, namely State Bank of India, ICICI Bank, Yes Bank, and IDFC, across four cities. These cities are New Delhi, Mumbai, Bengaluru, and Bhubaneswar.
Subsequently, the pilot will include Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank, according to the apex bank. It will also be expanded to include more cities namely, Ahmedabad, Hyderabad, Guwahati, Kochi, Indore, Shimla, Lucknow, and Patna. “The scope of pilot may be expanded gradually to include more banks, users, and locations as needed,” the apex bank said.
Through a digital currency, India’s apex bank hopes to reduce the country’s heavy reliance on cash, promote cheaper and more reliable international settlements, as well as protect citizens from the volatility of cryptocurrencies. Additional features and applications will be added in future pilots based on the result of this pilot, the Reserve Bank of India said.
The latest development comes as FTX, which used to be one of the world’s biggest cryptocurrency exchanges, collapsed. Amid FTX’s collapse, Rajeev Chandrasekhar, India’s minister of state for electronics and information technology, tweeted that Indian investors who got out of crypto due to the government’s “prudent guardrails of taxation and exchange control” should thank Prime Minister Narendra Modi for “his foresight and thus being saved from this crypto meltdown and losses.
In a press announcement, the Reserve Bank of India said that “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 e₹-R would offer features of physical cash like trust, safety, and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks.”