Guwahati: Reserve Bank of India (RBI) has announced the launch of much awaited Central Bank Digital Currency (CBDC), a form of government-issued cryptocurrency, for the retail customers from December 1. Users will be able to process transactions using e-R through a digital wallet provided by partner banks and kept on mobile phones or other devices.

The early phase of a pilot project would focus on the chosen areas and banks in a closed user group (CUG) made up of participating clients and business owners, according to the RBI.

Customers and merchants will be able to utilise the digital rupee (e-R), or e-rupee, in the four cities of Mumbai, New Delhi, Bengaluru, and Bhubaneswar, as part of the test. State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank will all take part in the regulated rollout of the digital currency in these four locations.

The service would thereafter be expanded to include Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla. The pilot will include four additional banks: Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank, according to the RBI.

If more banks, users, or locations are required, the pilot's scope may be gradually increased, according to the statement. The retail e-rupee will effectively function as an electronic form of currency and will be largely utilised for retail transactions by all private sector, non-financial consumers, and enterprises. It will be able to give access to secure money for payment and settlement since it will be the central bank's direct obligation.

RBI claims that "CBDC is the legal cash issued by a central bank in a digital form."
The e-R would be issued as a digital token with the same denominations as coins and paper money, representing legal tender.
Users will be able to conduct transactions using e-R using a digital wallet provided by the participating banks and kept on mobile phones and other devices, according to the RBI.

"The e-R would give features of physical cash, such as trust, safety, and finality of settlement. However, it won't accrue interest in terms of currency and may be transferred to other kinds of payment, such as bank deposits, according to the RBI.

The general purpose (retail) and wholesale categories of the digital rupee have been established by RBI based on the usage and activities carried out by it as well as the various levels of accessibility.
The pilot programme, according to the central bank, would assess the stability of the complete generation, distribution, and retail use of digital rupees in real time.

Based on the insights from this pilot, "other features and uses of the e-R token and architecture will be evaluated in subsequent pilots," it stated.

The reduction of operating expenses associated with physical cash management, promoting financial inclusion, and bringing resilience, efficiency, and innovation to the payments system are among the main reasons for considering the issuing of CBDC in India, according to RBI.
Incorporating digital currency will improve the settlement system's efficiency, spur innovation in the area of cross-border payments, and give the general public access to applications that any private virtual currency may offer, without the hazards involved.

With regard to private cryptocurrencies like Bitcoin, Ether, etc., the RBI has regularly raised concerns about money laundering, financing of terrorism, tax evasion, etc. Its own CBDC launch has been viewed as a method to balance the benefits and dangers of digital money.

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