Dinesh Khara, the chairman of SBI, calls the digital rupee a game changer

The Reserve Bank's first pilot project for retail digital rupee, according to SBI Chairman Dinesh Khara on Friday, is a "game changer" with long-lasting effects that should ensure better monetary transmission at significantly lower costs.

State Bank of India (SBI) is one of the participating banks in the retail digital rupee pilot project, which began on Thursday in Mumbai, New Delhi, Bengaluru, and Bhubaneswar.

The retail digital rupee (e?-R) initiative was launched in a private user group that included customers, merchants, and representatives from four lenders: State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank.

"RBI's retail-CBDC pilot project is a game-changer with long-lasting consequences that should provide greater financial transmission at significantly lower costs.

"The element of anonymity is essential for its acceptance. It collaborates with, completes, and advances the current currency architecture while also incubating new ideas, according to a statement from Khare.

Nine additional cities and four additional banks will be included in the second phase of the retail digital rupee project.

According to the RBI, the e-R has the characteristics of physical currency, including trust, safety, and settlement finality. It is a digital token that symbolises legal tender.

The central bank stated while launching the pilot project on November 29 that it "would not earn any interest and can be converted to other types of money, like deposits with banks."

The use of digital rupee is also anticipated to increase financial inclusion in the economy and lower operational costs associated with managing physical currency.

The Reserve Bank of India (RBI) began a pilot programme for the digital rupee on November 1 and it was only almost a month later that the digital rupee was officially launched.