Reserve Bank of India will launch retail central bank digital currency (CBDC) on pilot basis today, December 1.
The digital rupee would be in the form of a digital token that represents legal tender. The pilot will cover select locations in a closed user group (CUG) comprising participating customers and merchants. It will be issued in the same denominations that paper currency and coins are currently issued and it would be distributed through intermediaries and banks.
Eight banks have been identified for phase-wise participation in this pilot. The pilot will initially cover four cities, including Mumbai, New Delhi, Bengaluru, and Bhubaneswar, and later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
The central bank also said that users will be able to transact with digital rupee through a digital wallet offered by the participating banks and stored on mobile phones or devices. A Central Bank Digital Currency (CBDC) or a digital rupee is a digital form of currency notes issued by the RBI.
Digital currency or the rupee is an electronic form of money, that can be used in contactless transactions. During the Union Budget 2022, Union Finance Minister Nirmala Sitharaman had earlier announced that the central bank would be rolling out its digital currency soon.