Published on: December 1, 2022

Digital Rupee

Digital Rupee

Why in news?

The Reserve Bank of India (RBI) announced that the first pilot for the retail version of the digital Rupee (e-R) would be introduced in December


  • The project would cover select locations in closed user groups comprising participating customers and merchants. The e₹-R would be in the form of a digital token that represents legal tender.

What does digital rupee mean?

  • A digital rupee will be the electronic version of the Indian currency.
  • The RBI would issue e-R in the form of a digital token which would be legal tender.
  • The central bank will issue in the same denominations in which it currently issues paper currency notes and coins.

Which banks will issue e-R and in which cities?

  • In the first pilot of the retail digital rupee, four banks including the State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank will participate.
  • The pilot will initially be launched in four cities – Mumbai, New Delhi, Bengaluru and Bhubaneswar.

How to get digital rupee and how will it work?

  • Banks will issue and distribute digital rupee like physical cash.
  • A user will be able to undertake a transaction using e-R through a digital wallet offered by participating banks. Such digital wallets would have to be stored on mobile phones/devices in the form of applications and similar platforms.
  • The RBI will permit e-R transactions in both Person-to-Person (P2P) and Person-to-Merchant (P2M) modes.
  • Users will also be able to use e-R to make payments to merchants via QR codes.
  • Like physical cash, e-R will not earn any interest.
  • e-R will offer the flexibility of real-time conversion to other forms of money, like deposits with banks etc

Will it be safe to use digital rupee?

  • Like a physical currency note and coin, the e-R would offer the same level of trust, safety and settlement finality.