The Reserve Bank of India (RBI) opened a small group of participating customers and merchants to test the first retail digital rupee (e-R) pilot program. A digital token that represents legal tender in the form of the digital rupee. The central bank is now evaluating the stability of the entire process of creating, distributing, and using digital rupees at retail in real-time. It is anticipated to be utilized for transactions and payments.
The retail digital rupee (e-R) pilot program was launched by the Reserve Bank of India (RBI) earlier this month. Beginning on December 1 in four cities—New Delhi, Mumbai, Bengaluru, and Bhubaneswar—is the trial program for the Indian digital currency. Lenders from the State Bank of India (SBI), ICICI Bank, IDFC Bank, and YES Bank participated in the pilot project’s initial phase. The RBI is now evaluating the stability of the whole process of creating, distributing, and using digital rupees at retail in real time. The digital token is legal tender and the digital rupee is India’s very own digital currency. Banks would be used to distribute the digital money in India.
Why Digital Rupee doesn’t generate Interest?
The digital rupee is released as digital tokens in the same denominations as paper currency notes, acting as a digital representation of actual cash. The digital rupee does not accrue interest while it is kept in your digital wallet, just as currency resting in your wallet does not gain interest on its own. Banks will provide the digital wallet to store e-R.
Can one use Digital Rupees for Fixed Deposits?
Soon, rupees in digital form deposited in banks will be able to earn interest. The digital token may be changed into other types of currency, such bank deposits, according to the Center.
The e-R is being distributed in the same denominations as coins and paper money. The digital token may be used for both Person-to-Person (P2P) and Person-to-Merchant (P2M) transactions, he continued.
The e-R offers qualities of actual money, such as security, trust, and finality of settlement. Similar to cash, it has no interest accruing on it and may be changed into other kinds of payment like bank deposits.
In what ways does e-R vary from UPI?
A person can conduct a digital transaction with the use of e-R. You might be curious to know how the two vary as Unified Payments Interface (UPI) is already utilized for digital transactions.The main distinction between UPI and e-R is that e-R is a digital currency that allows transactions, whereas UPI is a platform via which transactions may be made.
Types of transactions possible with Digital Rupee
P2P (person-to-person) and P2M (person-to-merchant) transactions are both possible with the digital rupee (P2M). It may be used to pay using QR codes that are shown at retail places.
Cross-border payments might be a future use case as well. During the pilots, several use cases, technology architectures, and design elements are being tested. Examples of use cases include international payments (both wholesale and retail), offline functioning, etc. Based on the input from the pilots, next stages, including the extension of the use case, must be implemented in phases.