Digital Rupee: The country witnessed a new moment. It is said that the country’s economy has become one step more independent. India got digital currency ‘e₹’ for the first time in history.
The Reserve Bank launched this digital currency on November 1 i.e. Tuesday. RBI has launched E-Rupee as a pilot project for now. This digital currency will mainly be used for government securities settlement. That is, digital rupees will be used to settle secondary market transactions in government securities.
RBI said in a statement on ‘Operationalisation of Central Bank Digital Currency-Wholesale (e ₹-W) Pilot’.
It also announced that the first pilot in Digital Rupee – Retail segment is planned for launch within a month in select locations in closed user groups comprising customers and merchants.
9 Major Banks participation in digital rupee’s wholesale pilot project
The nine banks those who participate in digital rupee’s wholesale pilot project are 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.
What is Digital Rupee?
A Central Bank Digital Currency (CBDC) or Digital Rupee is a digital form of currency notes issued by a central bank. Digital currency or rupee is a virtual form of money, that can be used in contactless transactions. On Union Budget 2022, Finance Minister Nirmala Sitharaman announced that the Reserve Bank of India (RBI) would be rolling out its digital currency soon.
Types of CBDC
CBDC can be classified into two types.
1) Retail (CBDC-R): Retail CBDC would be potentially available for use by everyone.
2) Wholesale (CBDC-W) is designed for restricted access to select financial institutions.
What are the benefits of CBDC to RBI?
RBI is set to benefit from the launch of Central Bank Digital Currency or CBDC. This will reduce the pressure on liquid money. Besides, the cost of printing money will be reduced. Also this money loss benefit will not be availed.
Benefits of Digital Rupee
After the launch of digital currency by RBI, business transactions will become easier, transactions will be done in seconds without internet, check, bank account transactions will be hassle free, fake currency will not be a hassle. Besides, there will be no problem of money tearing, water getting wet. Apart from all this “It will become impossible to avoid the gaze of the government, thus subjecting every transaction to relevant laws within the country. Hence, the government will have better control over how money leaves and enters the country, which would allow them to create a space for better budgeting and economic plans for the future, and overall a much safer environment,” said Archit Gupta.