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The pilot project for retail participation in the central bank digital currency (CBDC) will commence on December 1, in four cities and with four banks, the Reserve Bank of India said on Tuesday.
The pilot project will cover select locations in a closed user group (CUG) comprising of participating customers and merchants.
RBI said the digital rupee for the retail segment would be in the form of a digital token that represents legal tender. It will be issued in the same denominations in which paper currency and coins are currently issued.
The token will be distributed through the banks, which are the intermediaries.
“Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones/devices. Transactions can be both person-to-person (P2P) and person-to-merchant (P2M),” the statement said.
Payments to merchants can be made using QR codes displayed at merchant locations. The e₹-R would offer features of physical cash like trust, safety and settlement finality.
“As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks,” the central bank clarified.
Operationalisation of Central Bank Digital Currency – Retail (e₹-R) Pilothttps://t.co/Coh632lCwU
— ReserveBankOfIndia (@RBI) November 29, 2022
Eight banks have been identified for phase-wise participation in this pilot. The first phase will begin with four banks – State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank – in four cities across the country. Four more banks, namely, Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join the pilot subsequently.
The pilot would initially cover four cities–Mumbai, New Delhi, Bengaluru and Bhubaneswar–and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
The scope of the pilot may be expanded gradually to include more banks, users and locations as needed, RBI said.
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