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.
A digital wallet, which will be provided by the participating banks and may be kept on users’ mobile phones or other devices, will allow users to conduct transactions with the CBDC.
In this pilot version, transactions between individuals and between individuals and merchants are permitted to take place. These transactions are referred to respectively as P2P and P2M. It is possible to make payments to shop owners using the QR codes that are displayed at various retail locations.
The digital rupee issued by India would give the same trustworthiness, safety, and finality of settlement as the country’s real currency. According to the Reserve Bank of India (RBI), cash “will not earn any interest and may be exchanged to other types of money, such as deposits with banks.” Cash also does not generate interest.
The CBDC experiment will evaluate, in real time, the stability of the generation, distribution, and usage of digital rupees in retail transactions. Following this pilot, more components and applications of the token, as well as the architecture, will be tested in pilots that will be conducted based on the lessons learnt here.
A total of eight financial institutions have been selected to take part in the various stages of this pilot project. In addition to the first four institutions that participated in this trial program, the Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank will soon join as well.
The pilot program will first provide service to the cities of Mumbai, New Delhi, Bengaluru, and Bhubaneswar in that order. In the future, Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla will also be included to the list. Patna and Shimla will soon be included.
It is possible that the pilot’s scope may gradually expand to include new banks, users, and places if the need arises.
The Reserve Bank of India (RBI) made the announcement a month ago that the trial launch of wholesale CBDC would begin on November 1, 2022. The central bank believes that a settlement in money would eliminate the need for settlement guarantee infrastructure as well as the need for collateral in order to reduce settlement risk. This would result in a reduction in transaction costs.
Compiled by Coinbold
