E-Rupee for retail will soon be piloted by 5 more banks in 9 more cities

Five more banks will join the pilot of the central bank’s digital currency, or e-rupee, for retail customers and the project will be expanded to nine additional cities, the Reserve Bank said on Wednesday.

The Reserve Bank of India, which began piloting the central bank’s digital currency, or e-rupee, for retail customers in early December with eight banks in five cities has stressed that it does not want to rush it but prefers slow and steady adoption.

Retail CBDC is only available to 50,000 users now, and of those, 5,000 are merchants. The service is being offered on an invitation basis by eight banks in five cities at present, Deputy Governor T Rabi Sankar told reporters on Wednesday at the usual press after issuing a policy.

Given the seamless adoption so far, five more banks will be added to the platform soon along with increasing the number of cities where the pilot service is available now from the current five to nine more, Sankar said.

“Having said that, and at the risk of being right, let me just reiterate that we want the process to happen. But we want the process to happen gradually and slowly. We are in no rush to do anything very quickly.

“We have our goals consumer-wise, merchant-wise, all of that. But we’re going to move through it slowly because we don’t want to do something without really understanding what the potential impact is and what that impact could be,” Deputy said the governor.

As for the transaction volume, he said it has been increasing slowly and so far it has been around Rs. 7.7 lakh only.

RBI on November 1 and December 1, 2022 launched CBDC for wholesale and retail respectively. While the wholesale CBDC use case is limited to settlement of secondary market transactions in government securities, the retail e-rupee is being piloted within a closed user group (CUG) comprising participating customers and merchants.

The first phase involved four banks — State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank, and subsequently four banks Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank joined.

The CBDC is expected to make the interbank market more efficient and e-rupee settlements can reduce transaction costs by eliminating the need for infrastructure to guarantee settlement or collateral to mitigate settlement risk.