The Reserve Bank announced the launch of the first pilot for retail digital Rupee (e₹-R) on December 01, 2022. The use case for this pilot is settlement of secondary market transactions in government securities. The pilot will assess the robustness of the entire process of creating, distributing and using digital rupees in real-time. Future pilots based on the learning from this pilot will test different features and applications of the e₹-R token.

• As per RBI, the closed user group (CUG) composed of customers and merchants would participate in the pilot. Retail digital Rupee (e₹-R) would be in the form of a digital token that represents legal tender and would be issued in the same denominations that paper currency and coins are currently issued. The RBI would issue this digital token through banks, which would be able to process payments on behalf of users. People could transact with e₹-R through digital wallets offered by participating banks and stored on mobile phones / devices. 
• Transactions made in the first pilot can be both Person to Person (P2P) and Person to Merchant (P2M). Payments to merchants could be made using QR codes displayed at merchant locations.  
• Initially four locations have been selected for launch of the first pilot which are: Mumbai, New Delhi, Bengaluru and Bhubaneswar; and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
• Eight banks have been identified for participation in two phases. The first phase will begin with four banks: State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in initial four locations across the country. In the second phase, four more banks: Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot.
• The e₹-R would offer features of physical cash like trust, safety and settlement finality. 
• Going forward, other wholesale transactions, and cross-border payments will be the focus of future pilots, based on the learnings from this pilot.

Prior to that RBI issued Concept Note on Central Bank Digital Currency (CBDC) for India  to create awareness about CBDCs and planned features of the Digital Rupee (e₹). The document aims at facilitating deeper understanding of the proposed currency and its uses. It includes information on the various issuance and structure choices that would be necessary for the future launch of the digital rupee. It also mentions the security and benefits of a central bank digital currency, as well as the risks that could arise from its use in the country. The advent of new technologies has made it possible to develop a new form of money, called central bank digital currency (CBDC).