RBI Digital Currency e-Rupee

RBI launched e-Rupee in 4 big city in India

What is retail e-Rupee | How it is different from UPI 
Benifits of e-Rupee 

Retail digital rupee can provide access to safe money for payment and settlement as it is a direct liability of the central bank, believes the Reserve Bank of India. Simply put, retail CBDC is an electronic version of cash primarily meant for retail transactions.

Digital rupee launched in four cities of the country, know through which banks the transaction will be done?

RBI Digital Currency Launched: RBI has launched the first tranche of retail digital rupees in Mumbai, New Delhi, Bengaluru and Bhubaneswar. Four public and private sector banks SBI, ICICI, Yes Bank and IDFC First have been included in this pilot project.

The Reserve Bank of India (RBI) on Thursday (December 1, 2022) launched the first pilot project for retail digital rupee offering in Mumbai, New Delhi, Bengaluru and Bhubaneswar. The retail digital rupee project has been launched among a limited user group, with four banks State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank allowing customers and merchants to transact with it. This transaction can be done both P2P (Person to Person) and P2M (Person to Merchant).

Digital rupee transactions will be done through four banks in the first phase

The first pilot project of retail digital rupee will involve four public and private sector banks SBI, ICICI, Yes Bank and IDFC First. The Central Bank Digital Currency (CBDC) will be issued in the form of a digital token and it will be a legal tender i.e. it will be considered as legal currency. E-Rupee will be issued at the same value at which currency notes and coins are issued at present.

The RBI had earlier said on Tuesday (29 November 2022) that retail digital rupee will be tested at select locations in the Closed User Group (CUG) on December 1. This e-rupee is equipped with features like trust, security and final settlement just like physical currency. The pilot project will test the robustness of the entire process of creation, distribution and retail use of digital rupee in real time. Earlier, the pilot test for its bulk use has started from November 1. The digital form will have all the features of currency notes. People will be able to convert digital money into cash. The special thing is that unlike cryptocurrency, there will be no fluctuation in its value. No interest is payable on Digital Rupee, also it can be converted into other cash like bank deposits.

It is the electronic form of cash. As you do cash transactions, you will be able to do digital currency transactions as well. CBDCs work somewhat like cryptocurrencies (like bitcoin or ether).

How will digital rupee work?

Central Bank Digital Currency (CBDC) will be a currency based on blockchain technology. Where wholesale digital currency is used by financial institutions (such as banks), retail currency can be used by the common man. E-Rupee, the digital form of Indian currency, will be distributed through four banks at present. This currency will be safe in the apps available from these banks. Users will be able to transact with e-Rupee through apps provided by banks, digital wallets stored in mobile phones and devices. It can be easily sent from mobile phone to each other and all kinds of goods can be bought. This digital rupee will be completely regulated by the Reserve Bank of India.

Transactions through digital wallets: Digital rupees can be kept in mobile phones and other devices. It will be distributed through banks. Users will be able to transact in e-Rupee through digital wallets provided by banks participating in the pilot test. QR Code Payments: Through e-Rupee, both person-to-person (P2P) and person-to-merchant (P2M) transactions can be done, said RBI. Payment can be made through the QR code installed at the merchant. Will not get any interest: Just like cash, the holder will not get any interest on digital currency. It can be used as a deposit with banks.

What will be the advantage of digital rupee?

Ease of transfer of money to banks, cost of printing currency will be reduced, prevention of illegal currency, easy tax collection, black money and money laundering will be curbed. E-Rupee is equipped with features like trust, security, final solution. E-Rupee will be issued at the same value at which currency notes and coins are issued at present.

Benefits for Corporates

Corporates can enable the well-being of their employees End-to-end digital transactions and require no physical issuance, thereby reducing costs Voucher redemptions can be tracked by the issuer Quick, secure and contactless free voucher distribution

Benefits for hospitals

1.  Easy & Secure – Vouchers are authorized through verification codes
2.  Hassle free and contactless payment collection – no cash or card handling required
3.  Quick redemption process – Vouchers can be redeemed in few steps and less drawdown due to pre-blocked amount

How is Digital Rupee different from Digital Payments or UPI?

 Ever since the introduction of payments through UPI in India, most people have stopped carrying cash. Instead of cash, people are now preferring to make payments using UPI. From December 1, RBI will also launch its retail digital currency, in such a situation, it is important to know that what is the difference between digital currency i.e. CBDC and payment through UPI i.e. payment from apps like Paytm, Google Pay and Phone Pay?

 

 Regarding digital rupee, RBI has said that CBDC transactions can be done through digital wallets of banks involved in the pilot project. The digital rupee will be operated and monitored by the RBI. On the other hand, UPI payment is a direct bank account to bank account transfer. Different banks handle UPI. RBI does the work of monitoring those banks. It is important to keep the following points in mind here.

It is important to understand that most digital payments work like a cheque. You give instructions to the bank. He makes a payment or transaction of 'real' rupees from the amount deposited in your account. Many organizations, people are involved in every digital transaction, who complete this process.

For example, if you made a payment with a credit card, did the person in front get it immediately?

No . Digital payments take anywhere from a minute to 48 hours to reach the recipient's account. Means the payment does not happen immediately, there is a process for it.

When you talk about digital currency or digital rupee, you have paid and the other person has received it. This is its specialty. The digital transaction happening now is the transfer of money deposited in a bank account. But CBDC is going to replace currency notes.

How will E Rupee work?

Now you must be thinking that how will RBI know the data of E Rupee, then let us tell you that this E Rupee will work on all the same principles and technology on which crypto currencies like Bitcoin and Ethereum work. This E Rupee also works on blockchain technology.

Let us tell you that E-Rupee will be regulated by using it in such a way that its information will reflect on your bank passbook as well.

How will this digital rupee be different from cryptocurrencies like bitcoin?

The concept of digital currency is not new. It comes from cryptocurrencies like bitcoin, which launched in 2009. After this, from Ether, Dodgecoin to fifty cryptocurrencies have been launched. Over the years, it has evolved into a new asset class that people are investing in.

Private cryptocurrencies are issued by private people or companies. Due to this it is not monitored. People are transacting anonymously, due to which cryptocurrency is being used in terrorist incidents and illegal activities. They are not supported by any central bank. This currency is limited, due to which its value fluctuates according to supply and demand. The value of one bitcoin itself has declined by up to 50%.

When you talk about the proposed digital rupee, the Reserve Bank is launching it here. There is neither a quantity limit nor an issue of financial and monetary stability. The one rupee coin and the digital rupee have equal strength. But digital money will be monitored and the Reserve Bank will know who has how much money.

Digital Rupee will not be able to be bought or sold like cryptocurrency but will act as a substitute for cash.

Has any country launched a digital currency so far?

Yes. After six years of research, the People's Bank of China launched two pilot projects in April 2020. The e-yuans were distributed through a lottery system. By June 2021, 24 million people and companies had made e-CNY i.e. Digital Yuan wallets.

Transactions of 3450 crore digital yuan (40 thousand crore rupees) have been done in China in utility bills, restaurants and transport. A Bloomberg report says that by 2025, the digital yuan will account for 9% of the Chinese economy. If successful, China would become the first country in the world to launch a central bank digital currency.

In January 2021, the Bank of International Settlements reported that 86% of central banks around the world are working on digital currency. Bahamas first introduced CBDC in October 2020 under the name 'Sand Dollar'. Also launched in 8 Eastern Caribbean countries including Jamaica, Nigeria.

Canada, Japan, Sweden, Switzerland, the UK and the United States, as well as the European Union, are working on a digital currency with the Bank for International Settlements.

15 countries currently testing: Russia, China, Saudi Arabia, UAE, Sweden, South Korea, Hong Kong, Thailand, Singapore, Malaysia, Ukraine, Kazakhstan, D. Africa, including Ghana. 26 countries including India were still in the stage of development.

There are four major advantages of digital currency-

1. After the introduction of digital currency, you will have to end the worry of keeping notes with you. Due to which people will not have to go through whatever inconvenience they face in bringing their money.
2. It is less expensive. Transactions can also happen faster. Compared to this, the printing cost of currency notes, transaction cost is also high.
3. It will be in the hands of the Reserve Bank that how much and when to issue the digital rupee. Excess or shortage of rupee in the market can be managed.
4.  A person does not need a bank account for digital currency. It can also be offline.
5. After the introduction of E Rupee Digital Currency, people will also get relief from the problem of fake notes in the market.
6. E Rupee Digital Currency will never burst nor can be erased and this age will be forever which we cannot see with the note of use in the present time.
7.  The government will keep an eye on digital currency. Tracking of digital money will be possible, which is not possible with cash.
8. After the introduction of E Rupee Digital Currency, the expenditure incurred by RBI for printing the currency will also be nominal..

For the first time, during the budget speech, the Finance Minister had announced the digital currency.

Finance Minister Nirmala Sitharaman made a big announcement regarding digital currency while presenting the Union Budget for the financial year 2022-23. According to the announcement of the Finance Minister, 30 percent tax will have to be paid on cryptocurrencies.

What is the opinion of the market on Digital Rupee?

About Digital Rupee Mahesh Shukla, CEO and Founder of Pay-Me, believes that Digital Rupee is a digital version of the traditional currency that people use on a daily basis. In this way you can keep the money safe in digital format. It is based on blockchain technology, in which the rupee is treated like a cryptocurrency, reducing the cost of currency maintenance. With this, you will get security, as well as the government will need to make less notes in future because digital rupee will be considered as a form of cash currency. At the same time, according to Rachit Chawla, CEO of Finway FSC, E-Rupee is a new form of digital token. It differs from cryptocurrency in that it is issued in the same denomination as traditional currency, and cryptocurrency has its own denomination. For example, a bitcoin unit may have a denomination of 0.001 while the digital currency will be available in 1, 5, 10, 20, 50 and other denominations available for physical currency. Using Digital Rupee you can send money to any person or pay any bill.