E-Rupee Pilot Project Launch in India

For the retail market, the Reserve Bank of India (RBI) debuted the Central Bank Digital Currency (CBDC), also known as the e-rupee or digital rupee, on December 1. For the use of the four participating banks, it provided Rs. 1.71 crore in e-rupee format. Currently, the e-rupee rollout will take place in four banks and four cities. The CBDC is currently being implemented as a pilot project, but it will eventually go through several stages in accordance with the RBI’s aim to roll it out gradually to avoid upsetting the current payment and settlement systems. The pilot’s goal is to inform people about digital currency and its applications. More banks and cities will be added to the pilot programme in the following phase. During the pilot phase, the e-rupee will be made available within a closed group for payments made between individuals and between individuals and merchants (P2P) (P2M). Users must install a wallet provided by the banks on their mobile devices in order to store e-rupee. A special QR code will be used at the merchant touch-point to make payments to retailers. Users can pay by scanning the code with their mobile devices. State Bank of India, ICICI Bank, IDFC Bank, and Yes Bank have been chosen to implement the e-rupee for the retail sector. New Delhi, Mumbai, Bengaluru, and Bhubaneswar will all offer e-rupee services. The list of banks that can provide e-rupee services will soon include HDFC Bank, Bank of Baroda, Kotak Mahindra Bank, and Union Bank of India. In the upcoming phase, e-rupee would be accessible in Ahmedabad, Guwahati, Hyderabad, Gangtok, Indore, Kochi, Patna, Shimla, and Lucknow, among other locations. The RBI stated that it will release more e-rupee based on consumer demand and the bank’s liquidity condition, despite the fact that it has already released Rs 1.71 crore for this reason. Street vendors and businesses are both examples of merchants. In the upcoming round of the experiment, payments to businesses like food delivery services and others like them will be supported. The RBI’s initial target population includes 50,000 businesses and consumers. Digital currency is a logical progression of money, according to Cecilia Skingsley, a former Swedish central banker and the current head of the Innovation Hub of the International Bank of Settlements, which is collaborating with many Governments on their CBDC projects. Digital money is quickly replacing physical money as internet commerce expands. Real-time money transfers are made possible by blockchain-based cryptocurrencies, which is one of their main advantages. Global remittance transfers can cost between 5% and 25%, however, transfers using tokens enabled by blockchain can be almost completely free. A global network of financial institutions has been established by several blockchain businesses, including Ripple Labs, to provide individuals with quick and affordable remittance services. Additionally, they provide financial institutions and remittance service providers with speedy and affordable payment settlements. The banking sector cannot continue to ignore these trends without succumbing to the growing bitcoin market and losing clients. Given this, it is likely that the e-rupee for the retail sector will be a great success. It might compete with companies like Paytm, GPay, and others of a similar nature. It might succeed and grow to be as successful as the UPI.

However, this is all due to the enormous Indian market and the country’s leadership in the digital transition. Unquestionably, the RBI made a bold decision with this one that will help lower transaction costs for financial transactions, increase financial system transparency, speed up cross-border business transactions, lower the cost of currency management, and enable real-time payments without any inter-bank settlement.