India's RBI to soon commence pilot project of digital rupee

The digital rupee seeks to replicate the features of cash and will not pay out interest, unlike bank deposits

The Reserve Bank of India will soon commence limited pilot launches of a central bank-backed digital rupee for specific use cases, it said in a concept paper released on Friday.

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The RBI has been exploring the pros and cons of a central bank digital currency for some time and is working towards a strategy to implement it in a phased manner, it said.

Use cases are being examined for an e-rupee in a way that there is minimal or no disruption to the financial system, the RBI added.

In February, the Indian government had said that a digital rupee will be launched during the course of this financial year.

The discussion around a central bank led digital currency has gained traction across a number of countries as cryptocurrencies became popular.

"It is the responsibility of central bank to provide its citizens with a risk free central bank digital money which will provide the users the same experience of dealing in currency in digital form, without any risks associated with private cryptocurrencies," the RBI said.