India’s own digital currency: e₹-R

On 1-Dec, 2022,  the RBI (Reserve Bank of India) which is the Central bank of India announced the pilot rollout of the CBDC or Central Bank Digital Currency – a retail Digital Rupee. It would be represented as e₹-R. In the pilot phase, the rollout will cover only a limited number of locations and a closed user group which will comprise both customers and merchants. According to RBI statement, nine banks are selected for the initial pilot phase – State Bank of India, Bank of Baroda, ICICI Bank, IDFC First Bank, HSBC, HDFC Bank, Kotak Mahindra Bank, Union Bank of India and Yes Bank.

Pilot Banks

The digital rupee will be available in the same denominations as coins and notes and will take the form of a digital token that will be represented as a legal tender. One can get hold of digital rupee through intermediaries which are currently the Banks recognised by RBI. Similar to the regular currency, the digital rupee can be transferred via person to person and between banks. Unlike regular currency, digital rupee wont gain interest if kept in the digital wallet.

There are two types of CBDCs:

  • Token based CBDC – There is no specific ownership for these tokens. Whoever is the holder of the token will be the owner, similar to physical currency notes.
  • Account based CBDC – As the name suggests, it will be linked to an account and that person will be the owner of the tokens.

As per RBI, one does not require to hold a bank account to be able to do digital rupee transactions. Further it is mentioned that to allow similar levels of anonymity that comes with physical rupee, any digital rupee transactions under 50,000 will not be recorded by the banks. As of now, for transactions, you need internet connectivity, but in future there could well be support for offline transactions using digital rupee for catering rural areas of India where the network connectivity is poor. There is a limit to the number of digital wallets one can hold as per RBI – For one mobile number, you can have one digital wallet registered with the bank. Since the digital wallet is maintained centrally by RBI, unlike UPI, a single mobile number will not be able to have multiple digital wallets.

Digital wallets and digital rupee will save huge amount of money that is currently invested by the Govt and RBI. The cost involved includes the printing cost, setting up of a currency printing press, managing the manpower, purchasing high-quality paper, purchasing inks and many more expenses similar to this. Completely going digital means there would be less black money involved as every rupee can be tracked to a wallet and its owner.

RBI is with the belief that the central bank has the responsibility to offer its citizens a risk-free central bank digital currency that would give them the exact same experience as exchanging money in digital form while negating any risks associated with private cryptocurrencies.




Author Details

Roy Maria John

Roy M J is a Technology Architect with Infosys. He is a Digital Transformation Specialist associated with Digital Experience IP Platforms & Frameworks in Infosys. He helps in delivering digital transformation for large enterprises across the globe via Live Enterprise Interactions Suite and Digital Marketplace Platforms. He has rich experience in Web technologies primarily on the JavaScript stack. He is part of Cloud and Emerging Technologies track in the Digital Technology Council.

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