The Reserve Bank of India on Friday said it will soon commence limited pilot launches of digital rupee for specific use cases.

The digital currency is an equivalent to the banknote but will be issued in electronic form.

In a concept note released on Friday, the central bank said it has been exploring the pros and cons of e-rupee for some time and is working towards a strategy to implement it in a phased manner.

The Reserve Bank of India added that it is examining use cases for digital currency in a way to ensure there is minimal or no disruption to the financial system.

The central bank backed digital currency will be freely convertible against commercial bank money, according to the note. “It must be accepted as a medium of payment, legal tender, and a safe store of value by all citizens, enterprises, and government agencies,” the note added.

The bank also indicated that it may consider both retail and wholesale digital currency, saying there maybe merit in introducing both. The retail digital currency will be available for use to private sector, non-financial consumers and businesses. In its wholesale form, it will be for restricted access to select financial institutions.

On February 1, Union Finance Minister Nirmala Sitharaman had announced in the annual Budget speech that the Reserve Bank of India will introduce a digital rupee during the course of the financial year.

“Introduction of a central bank digital currency will give a big boost to the digital economy,” Sitharaman had said in her speech. “Digital currency will also lead to a more efficient and cheaper currency management system.”