A pilot for retail central bank digital currency (CBDC), or retail digital rupee (e₹-R) started on December 1. The RBI said that the digital rupee can be used – like physical money – to buy whatever users want in the future. However, unlike hard money, transactions via CBDC may not be fully anonymous.
Deputy Governor of Reserve Bank of India, T Rabi Sankar was cited as saying that transactions via CBDC would remain anonymous “to a certain degree.” He, however, added that the technology and legal provisions can be explored to ensure anonymity.
Digital rupee vs physical money
A CBDC or a digital rupee is essentially a digital form of currency notes/ coins that are issued by the RBI. It can be used to make contactless payments by scanning QR codes just like we do via UPI apps – essentially getting the best of both worlds. The digital rupee also gets trust, safety and settlement finality features of physical money.

“Digital currency is like payment of cash, it is possible that two private entities can provide wallet features and money can move in between them. That is not possible with UPI which has to be from one bank to the other,” Sankar added.
Digital rupee pilot program
The pilot programme gets significant because then the apex bank will be able to test the robustness of the entire process. The process includes digital rupee creation, distribution and retail usage in real time. “Different features and applications of the e₹-R token and architecture will be tested in future pilots, based on the learnings from this pilot,” RBI had said in a press release. The RBI may also test anonymity, security and privacy related to digital currency.

“It is possible to get a legal provision to ensure anonymity. What exactly will happen will depend on how things evolve, but anonymity is a basic feature of currency and we will have to ensure that (with CBDCs),” Sankar said. However, there is no clarity on the level of anonymity of digital rupee transactions.