The Reserve Bank of India announced the launch of the first pilot for retail digital Rupee on 1 December 2022. This comes after the apex bank stated on October 31 that the pilot would commence in a month’s time.

The digital rupee would be in the form of a digital token that represents legal tender, the RBI said.

The RBI 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.

“The pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants” the RBI said in a statement.

It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks.

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.

“Transactions can be both Person to Person and Person to Merchant. Payments to merchants can be made using QR codes displayed at merchant locations,” the statement read.

As many as eight banks have been identified for phase-wise participation in this pilot, the RBI said.

The first phase will begin with four banks- State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank – in four cities across India.

Four more banks, including Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank, will join this pilot subsequently.

The pilot would initially cover four cities – Mumbai, Delhi, Bengaluru and Bhubaneswar; 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, the central bank stated.

Presenting Union Budget 2022, Union Finance Minister Nirmala Sitharaman had earlier announced that the central bank would be rolling out its digital currency soon.