New Delhi: As expected, the pilot for the retail digital rupee was launched in Mumbai, New Delhi, Bengaluru and Bhubaneswar on December 1, 2022. The retail digital rupee project started in a closed user group with the participation of four leading lenders, including State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank. Later, it will be extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. The scope of the pilot may be expanded gradually to include more banks, users and locations as needed.
What is the Digital Rupee? According to the concept note, the Central Bank Digital Currency (CBDC) is the Reserve Bank of India's official form of currency. The regulator stated that the RBI's CBDC, also known as the Digital Rupee or e-Rupee, is interchangeable one-to-one at par with the fiat currency and is the same as a sovereign currency. As per the central bank digital currency (CBDC) tracker, almost 105 countries representing 95% of the world GDP have taken steps to inculcate digital currency in their ecosystem.50 countries are at the advanced phase of exploration to launch digital currency, while 10 countries have fully launched digital currency.
The founder of Shree Consultants Kishore Subramanian clarifies that the difference between digital currency and UPI is that digital currency is like physical currency issued by the central bank and is the RBI's liability whereas UPI is a means of payment. Any transaction through UPI is the respective bank's liability.
The e-Rupee would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks. Users will be able to transact with eRs-R through a digital wallet offered by the participating banks and stored on mobile phones devices. Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations.
Hemant Jain, vice president of the PHDCCI in his welcome address stated that the Central Bank's digital currency is based on the principles of trust, safety, liquidity, and integrity. He informed that the switch over to digital currency will plug the loopholes and eventually wipe out all the black money in the system. This will also help the CBDC to remove Rs 4,984.80 crore in security printing costs borne by the general public, businesses, banks, and RBI on physical currency.
To summarise, The digital rupee is not a cryptocurrency and is probably the most far removed from a cryptocurrency. The digital rupee is simply physical money converted to digital money. This will not only enhance and improve the daily convenience in our lives but it will also propel our country and economy forward in the coming decade.