India's Retail CBDC Pilot To Start In Four Cities On Dec. 1

The first phase of the pilot programme for India's retail "Central Bank Digital Currency" will start on Dec. 1.

The first phase of the pilot will begin with four banks: the State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank, according to an announcement by the Reserve Bank of India on Tuesday. The pilot will initially be conducted in Mumbai, New Delhi, Bengaluru and Bhubaneswar. It will later be expanded to other cities.

While only four banks are involved in the initial stage of the pilot, Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will subsequently join in.

"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' and 'person-to-merchant'," the RBI's announcement said.

Payments to merchants can be made using QR codes, it said.

According to the announcement, India's retail CBDC will be issued in the same denominations that paper currency/coins are currently issued and distributed in, using commercial banks.

The CBDC will run on a digital ledger-based architecture where banks act as nodes for the network, according to persons familiar with the pilot, who spoke on condition of anonymity. Such CBDC models are called indirect or intermediated models, where banks perform checks for know-your-customer or anti-money laundering requirements.

In addition to working on a wallet-based mechanism, the CBDC will also allow retail users to delete their transactions from the record once they've been completed.