RBI's pilot project for retail digital rupee is game changer, says SBI Chairman

The Reserve Bank's first pilot project for retail digital rupee is a game changer with long lasting effects that should ensure better monetary transmission at lower costs, said Dinesh Khara, SBI Chairman. The central bank started a pilot project for retail digital rupee e-R in Mumbai, New Delhi, Bengaluru and Bhubaneswar on Thursday. State Bank of India SBI is one of the participating banks. The project will be extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. Eight banks have been identified for phase-wise participation in the retail pilot of the digital rupee. Four banks, including IDFC First Bank, ICICI Bank YES Bank and State Bank of India will take part in the pilot launch, along with customers and merchants. Four more banks — Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank — will join this pilot subsequently. RBI's pilot project on retail-CBDC is a game changer with durable effects that should ensure better monetary transmission at less cost. The anonymity factor is critical for its acceptance. It adds to the currency architecture in vogue, complementing and completes it, while incubating further innovation, Khare said in a statement. According to the RBI, the e-R is in the form of a digital token that represents legal tender and will offer features of physical cash like trust, safety and settlement finality, as it will not earn any interest and can be converted into other forms of money, like deposits with banks, the central bank said on November 29. The use of the digital rupee is expected to reduce operational costs related to the management of physical currency and increase financial inclusion in the economy. The launch of the digital rupee comes almost a month after the Reserve Bank of India RBI started a pilot in the digital rupee wholesale on November 1.