Indian central bank, the Reserve Bank of India (RBI), announces the launch of the first pilot for retail CBDC on December 01, 2022. The first phase of the pilot will begin with four banks: State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank in four cities.
According to the announcement, the Indian CBDC would be issued in the same denominations that paper currency and coins are currently issued, and the token would represent legal tender.
Users will be able to transact with the CBDC through a digital wallet offered by the participating banks and stored on mobile phones or devices.
Both person-to-person (P2P) and person-to-merchant (P2M) transactions are allowed in this pilot version. QR codes that are displayed at retail places can be used to make payments to merchants.
India’s digital rupee 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” RBI states.
The CBDC pilot will assess the stability of the creation, distribution, and retail use of digital rupees in real time. Based on the lessons learned from this pilot, other aspects and uses of the token and architecture will be evaluated in subsequent pilots.
Eight banks have been chosen to take part in this pilot project in phases. Following the initial four banks, this pilot will also soon include the Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank.
Mumbai, New Delhi, Bengaluru, and Bhubaneswar would be the first four cities the pilot would serve. Later, Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla would also be included.
As needed, the pilot’s coverage may be steadily broadened to include additional banks, users, and locations.
Last month, RBI announced it will commence the pilot launch of wholesale CBDC on November 1, 2022. According to the central bank, the settlement in money would cut off transaction costs by preempting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk.
