RBI launches first pilot of digital rupee today

HY News 01 November, 2022 12:33 pm IST

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The Reserve Bank of India will roll out the digital rupee for the wholesale segment on Tuesday as part of its first pilot test programme to review and improve the currency’s functionality.

The central bank will launch a similar test for the retail segment in closed user-groups of customers and merchants within a month, RBI said on Monday.

For the wholesale segment, the pilot will test the settlement of secondary market transactions in government securities. Nine banks—State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC—will participate in the pilot.

E-rupee or digital rupee is a digital version of the Indian rupee. The RBI has proposed to issue two versions - wholesale for interbank settlement and retail for the public. According to the indirect model proposed by the RBI, you will hold the digital rupee in a wallet with a bank or service provider.

The retail version of the digital rupee is token based. Broadly this means, you find out the recipient’s public key (think of it like an email address) and transfer money to them using your private key (essentially, a password).

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