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India to launch the retail phase of its digital rupee project in December

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(Kitco News) - The Reserve Bank of India (RBI) has announced that it is prepared to move on to the next step in creating its central bank digital currency (CBDC) – the digital rupee – after the successful completion of a pilot program testing the wholesale usage of its CBDC. 

Next, the bank will initiate a pilot program to explore the use of a retail digital rupee that members of the general public will be able to use, according to a report from the Economic Times of India. The retail digital rupee pilot is expected to launch within the next month.

At launch, the new pilot program will include the State Bank of India, Bank of Baroda, ICICI Bank, Union Bank of India, HDFC Bank, Kotak Mahindra Bank, Yes Bank and IDFC First Bank. Eventually, the RBI intends to expand the pilot to include all the commercial banks in the country.  

The National Payments Corporation of India (NPCI) will be hosting the CBDC platform, which will be similar to the instant real-time payment system formed by NPCI, the unified payments interface (UPI) system.

Payments on the UPI system have been hugely successful in India as they allow for instant money transfers that go directly into the bank accounts of recipients. The retail CBDC is not intended to replace this system but is instead being built to complement the system. The retail CBCD will be interoperable with other payment systems and will work in a similar fashion as UPI.

“Just like we have a common library for UPI, the technology for CBDC is similar to that, and it is being hosted by NPCI, it will be interoperable with the current payment platforms,” an anonymous source told the Economic Times of India. “The e-rupee will be stored in a wallet, the denominations will be available as per the customer’s request, just like you request cash from an ATM. Banks are launching this only in select cities.”

India's central bank reveals its plans for a digital rupee

Each bank participating in the trial will test the CBDC among 10,000 to 50,000 users, and gradually the pilot will be expanded to the country’s entire banking system.

To facilitate the smooth transition to adoption, the participating banks have partnered with payment providers PayNearby and Bankit to enable merchants to accept payments via the digital rupee. 

A special wallet to hold the CBDC will need to be downloaded by both customers and merchants. Initially, the wallet will operate as a standalone product, but the RBI intends to fully integrate the final version with existing mobile and internet banking services. 

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