The Reserve Bank of India (RBI) has launched digital Rupee pilot in 4 cities today. The aim is to gradually do away with paper money.
Digital Rupee Launched: The Reserve Bank of India (RBI) has launched digital Rupee pilot in 4 cities today. The aim of the digital currency is to gradually do away with paper money. It is not linked with cryptocurrency or Blockchain technology.
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WHAT IS DIGITAL RUPEE?
Digital Rupee or digital currency is virtual money that would serve the same purpose as physical money. The value of digital Rupee and paper money are the same: 1 digital Rupee is equal to Re 1 cash. Unlike crypto, which is a volatile market and value fluctuates as per the market, digital Rupee’s value never changes and has the same denominations as paper currency and coins.
DIGITAL RUPEE LAUNCHED IN THESE CITIES
The central bank of India has started the pilot of digital Rupee in four cities including — Mumbai, New Delhi, Bengaluru, and Bhubaneswar. For the initial testing, RBI partnered with four banks — State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank.
Once the testing process begins, RBI will extend the partnership to four more banks including — Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank. The service will also be expanded to more cities in the days to come. Cities that will get access to digital Rupee in the second phase include — Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
HOW IS DIGITAL RUPEE DIFFERENT FROM CRYPTOCURRENCY?
Digital Rupee and cryptocurrency are two different things and are in no way linked to one another. While crypto is based on blockchain, that’s not the case with digital Rupee. The newly launched digital Rupee is Central Bank Digital Currency (CBDC), and the primary idea behind launching it is to eliminate cash money from the market eventually.
Another aspect where crypto and digital Rupee do not match is the value factor. Cryptocurrency is a risk-driven market and its value changes depending on the market conditions. That’s not the case with digital Rupee. Its value remains the same throughout, just like cash money.
The only difference is that, as the name suggests, digital Rupee is a “digital” format of paper money. Interestingly, the value of digital Rupee and paper money is the same, just that handling digital Rupee is far easier and cheaper.
HOW CAN I BUY DIGITAL RUPEE?
For the initial testing, RBI has partnered with four banks — State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank — to release digital Rupee to users. Currently, RBI is testing the pilot in — Mumbai, New Delhi, Bengaluru, and Bhubaneswar. To buy digital Rupee, users will need to head to the official app or website of any of the four designated banks. For now, RBI hasn’t shared the exact process for buying digital Rupee but it did mention that customers will be able to make payments with digital Rupee using QR codes displayed at merchant locations and the money will be deducted from bank wallet.
HOW CAN I USE DIGITAL RUPEE?
RBI mentioned that users will be able to use digital Rupee to buy goods and shop from their nearest kirana stores. The transaction in digital Rupee can happen between Person to Person (P2P) and Person to Merchant (P2M). “The e-Rupee would offer features of physical cash like trust, safety, and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks,” RBI officially stated.
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CAN I TRANSFER DIGITAL RUPEE?
For now, the digital Rupee transfer process will be supported only by designated banks (State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank). So, users will be able to store digital Rupee just like they store money in Paytm wallet and it can be used for transactions when required.
