Over the years, the currency has evolved from barter systems, coins, and notes, to plastic money. Now we are moving towards a digital transformation by launching ‘Digital Rupee’!
The Reserve Bank of India (RBI) launched Digital Rupee on 1st November 2022. This digital rupee also has a name. It is called the ‘Central Bank Digital Currency’ or CBDC. Currently, CBDC is launched in the pilot phase with nine banks. These banks are the State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC Bank.
These banks will be able to use digital currency for transactions in government securities.
What is Digital Rupee?
Digital Rupee is the digital form of currency notes issued by the RBI. It is just like a currency note but in a digital form. You can use it to perform transactions. RBI has divided digital currency into wholesale currency and retail currency.
The private sector, businesses and consumers can use the retail currency. At the same time, the wholesale currency will be limited to the selected financial institutions. Earlier, using an e-wallet was an option, but it is not the same now.
Is Digital Rupee a Cryptocurrency?
No, a digital rupee is different from a cryptocurrency. Cryptocurrencies are not regulated, but RBI regulates the e-rupee.
Transaction Charges on E-Rupee
When you swipe your credit or debit card, the merchant pays a Merchant Discounting Rate. But, digital currency is based on rupee-to-rupee transactions. Hence, you don’t have to pay any charges.
Moreover, UPI transactions have a per-day limit, but you can easily transfer large amounts through digital currency.
How Will it Be Used?
E-rupee will remain in your bank account or mobile e-wallet like cash. Its value will be equal to the currency note.
How Will It Benefit The Indian Economy?
According to the RBI, Digital Rupee will help strengthen India’s digital economy, making the payment system more efficient and preventing money laundering.
The dependence on cash will be reduced after the full-fledged implementation of digital currency. Transaction costs will fall drastically. Along with this, the government will have a direct eye on big transactions. In the future, Digital Rupee can also be used for payment in foreign countries.