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Reserve Bank of India to launch its retail CBDC pilot on December 1

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(Kitco News) - The Reserve Bank of India (RBI) is wasting no time in its quest to develop a digital rupee that can be accessed by the public at large as the central bank has announced that it will launch its first pilot program for a retail e-rupee on Dec. 1. 

The RBI has been running a pilot program for a wholesale central bank digital currency (CBDC) since Nov. 1. Nine banks have been participating in that trial, which explores the settlement of transactions in government securities.

The retail phase of the pilot will “cover select locations in a closed user group comprised of participating customers and merchants,” the central bank said. The e-rupee will be distributed in digital token form and represent legal tender. 

“It would be issued in the same denominations that paper currency and coins are currently issued,” the announcement said, noting that trusted intermediaries such as banks will handle the distribution. 

Participants in the pilot will be able to transact the e-rupee from a digital wallet that will be supplied by the participating banks and stored on mobile devices. Users will be able to conduct both person-to-person and person-to-merchant transactions utilizing QR codes to direct where payments are sent. 

According to the RBI, “The [e-rupee] would offer features of physical cash like trust, safety and settlement finality,” and similar to cash, “it will not earn any interest and can be converted to other forms of money, like deposits with banks.”

The overall goal of the pilot is to “test the robustness of the entire process of digital rupee creation, distribution and retail usage in real time.” Future pilot programs will explore additional features and applications of the digital rupee token and architecture once the findings from this initial pilot are reviewed. 

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The retail pilot has been split into two phases. The first phase will include the State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank, and will be limited to the cities of Mumbai, New Delhi, Bengaluru and Bhubaneswar. 

Once the first phase is completed, the pilot will move onto the second phase, which will add four additional banks – Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank – and will expand to the cities of Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.

“The scope of pilot may be expanded gradually to include more banks, users and locations as needed,” the RBI said. 

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