The first pilot for retail digital rupee (e₹-R) will be launched on December 01, 2022, the Reserve Bank of India (RBI) announced on November 29.
The pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants, it said.
Eight banks have been identified for phase-wise participation in this pilot, the RBI said, adding that 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 -- Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join this pilot subsequently, a media release issued by the central bank noted.
"The pilot would initially cover four cities, viz., Mumbai, New Delhi, Bengaluru and Bhubaneswar and later extend to 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," it said.
Also Read: MC Explains | RBI kicks off digital rupee pilot: 12 Questions answered
Also Read: Exclusive | RBI provides platform for G-Sec trading via digital rupee
The pilot programme is aimed at "testing the robustness of the entire process of digital rupee creation, distribution and retail usage in real time", RBI said. Different features and applications of the e₹-R token and architecture will be tested in future pilots, based on the learnings from this pilot, it added.
According to the RBI, the e₹-R would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued, and would be distributed through intermediaries, i.e., banks.
Also Read | Nikhil Kamath says those critical of digital rupee 'might be missing the big picture'
Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones/devices, RBI said.
"Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations," it noted.
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, RBI further said.
(This is a developing story. Please check back for more updates)