The E-Rupee Experiment

At the Winter Olympics in Beijing last February, visitors were in for a surprise. They could, once they had scanned their passports, exchange their foreign currency for eCNY, an electronic form of the Chinese Yuan-the digital currency from the People's Bank of China, the nation's central bank. All that the visitors needed to do was use a card or a mobile app to spend this digital currency for purchases at the Olympic Village. Could something similar materialise in India anytime soon?

- M.G. Arun

It could, but for that a low-key experimentation by the Reserve Bank of India (RBI) currently underway in four cities needs to find more success than is being ascribed to it now. The central bank had launched a pilot project of its digital currency, the e-rupee, on December 1. Just weeks into the experiment, though, there is a general apprehension regarding the way it's going. By the end of the first week of January, about 16,000 users had made payments worth some Rs 64 lakh in a total of 160,000 transactions using the e-rupee. Those numbers can offer only a partial picture at present, though. It's difficult to bracket them conclusively one way or the other because of the limited nature of the pilot project.

As of now, only four banks-the State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank-are facilitating the pilot programme, launched in Delhi, Mumbai, Bengaluru and Bhubaneswar, which is being strictly controlled by the RBI. Four more banks-the Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank-will join this pilot subsequently. The RBI will issue and redeem the e-rupee, and delegate the distribution and payment services to the banks. There will be closed user groups, including both customers and merchants, as part of the pilot project. The payments can be made by scanning a QR code at the vendor's outlet.