December 1, 2022 was the day when the pilot for the RBI’s CBDC called e-rupee for retail use has commenced. The RBI has selected SBI, ICICI, Yes and IDFC First Bank for the first phase. Later, Bank of Baroda, HDFC and Kotak will participate in this exercise.

The e-rupee will be used for retail payments for closed user groups consisting of consumers and merchants. E-rupee will be a token. The denominations will correspond to those of the paper currency. The transaction can be person-to-person (P2P) of person-to-merchant (P2M). The digital rupee will be stored in an e-wallet issued by the banks. The payments to merchants can be made through QR codes too. The e-wallet amount would not earn interest. However, it could be converted to deposits in the banks. There would be digital currency QR codes, different from those used for UPI payments. Instead of a physical wallet the digital currency would be in the electronic wallet.

The banks will be given digital currency by the RBI on indenting. Later, the currency will be passed on to consumers. It is easier to hold an electric wallet, no weight, just light. It is secure too.

The next phase of trial will also start soon.

To begin with, the e-rupee will be available Mumbai, Delhi, Bangalore and Bhubaneshwar. Later, it will be extended to other cities such as Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.

The improvements will be incorporated in the future pilots.

In the first three days of the pilot, there were over 2000 transactions. The RBI has created Rs.1.71 crore worth of e-rupee for the pilot, which is expected to expand after the four other banks participate in the pilot.

When the transactions are made from one CBDC wallet to another, it is not recorded in the CBS or core banking solution, and remains anonymous, and is as good as physical cash transaction.