In Tuesday’s announcement, the Reserve Bank of India said it will initially test its central bank digital currency (CBDC) — a retail version of the digital rupee — in Mumbai, New Delhi, Bengaluru, and Bhubaneswar, with the participation of four banks: State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank.
CBDC pilot phase
Nine more cities and four institutions will eventually be part of the pilot, the central bank said.
In a closed user group, merchants and customers will participate in the pilot phase of the CBDC. Like paper money, the CBDC will use existing denominations and not generate any interest. Instead of QR codes, merchants will accept the digital rupee using barcodes.
The finance minister announced the decision to start the pilot in December on October 26, 2018. Nirmala Sitharaman revealed plans to issue a digital rupee in the financial year ending 2023 during her budget speech in February.
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