The Reserve Bank of India had been working on its own virtual or digital currency for some time and December 1 saw the official launch of its retail version. The currency, known as Central Bank Digital Currency (CBDC) will see a regulated test pilot with select customers and retailers / merchants.
Have a look at some important information on RBI’s digital rupee launch.
The digital rupee initiative by RBI is quite interesting and a successful roll out can be a game changer.
Here are some key points that you should know about India’s Digital Rupee or E-Rupee:
Some of the banks that are participating in RBI’s digital rupee pilot are:
State Bank of India (SBI), ICICI Bank, Yes Bank and IDFC First Bank. As part of the first phase of the pilot, these banks will cater to four major cities namely New Delhi, Mumbai, Bhubaneswar and Bengaluru.
In the second phase, HDFC Bank, Bank of Baroda, Union Bank of India and Kotak Mahindra Bank will partner in the pilot for rollout in Ahmedabad, Guwahati, Gangtok, Patna, Shimla, Hyderabad, Lucknow, Kochi and Indore.
Two types of digital rupee will be issued :
Retail CBDC – R will be the common digital currency for use by the general public, consumers, private sector and businesses.
Wholesale CBDC – W will be issued with limited and restricted access, to be used by banks and financial institutions for wholesale banking transactions and interbank settlements
The primary reasons cited by RBI for its digital currency launch are :
In 2021, RBI Deputy Governor, T R Sankar had said that central banks in most of the countries have realized that digital is the way forward. However, RBI has taken a lead and is amongst the few major central banks which have reached the pilot stage. A smooth implementation will ensure a new age of digital transformation in the way banking has traditionally been conducted. The retail payment ecosystem will also get a much needed digital boost, benefitting the customer as well as the merchant.
Currently, it’s in the testing phase and only select users can use it in this controlled environment. Once completed successfully, it will be rolled out for the general public.
Transactions can be carried out through a digital wallet and can be stored on mobiles or other devices.
The denominations of digital rupee will be similar to coins and currency notes which are currently in use.
The digital currency stored in wallets will not earn any interest.
Yes, the digital currency is freely convertible. It can be easily converted to cash, money or deposits with banks.
There is no charge for converting currency to CBDC or digital currency.
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