DIGITAL RUPEE / e-₹ (e-Rupee) / CBDC
| RBI launched Digital Rupee on 1-12-2022. RBI has identified Eight banks for phase-wise participation in the pilot. | ||||||||
| SBI, ICICI, Yse Bank and IDFC are the first banks in four cities (Mumbai, New Delhi, Bengaluru and Bhubaneswar) across the country in the first phase. | ||||||||
| Four more banks (BOI, UBI, HDFC Bank and Kotak Mahindra Bank will become part of this pilot subsequently. | ||||||||
| Later, Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla will become part of testing. | ||||||||
| The success will decide further extension of the scope of the pilot to include more banks, users and locations. | ||||||||
| 1 | What is Digital Rupee ? | |||||||
| Digital Rupee or CDBC (Central Bank Digital Currency – is a digital form of physical paper note or currency issued by the RBI. | ||||||||
| It is basically “cash in your pocket wallet” but in digital form [Like cash in your Paytm Wallet]. | ||||||||
| 2 | What are the types of Digital Rupee or CBDC ? | |||||||
| CDBC is classified in two broad types : | ||||||||
| (i) General Purpose or Retail (CDBC-R) : Available for use by all like Cash (Private Sector & Non-Financial Consumers and Businesses). | ||||||||
| (ii) Wholesale (CDBC-W) : Restricted access to Select financial institutions (Eg. Settlement of Inter-bank transfers and related wholesale transactions). | ||||||||
| 3 | Why is Digital Rupee needed in place of Physical Paper Note or Currency ? | |||||||
| (i) | To Reduce cost of Printing and handling-cost to Govt. | |||||||
| Physical paper note or currency is printed on very high quality cotton (100%) using different inks and applying many different security features. | ||||||||
| RBI spends very high expenditure on printing indian currency. During the FY 2021-22, the estimated expenditure was approx. Rs. 49.85 Billion. | ||||||||
| [Note : 1 Billion = 100 Crores.] | ||||||||
| Paper Note Printing cost in India | ||||||||
| Denomination in Rs. | Printing Cost Per Note | |||||||
| 10 | 1.01 | |||||||
| 20 | 1 | |||||||
| 50 | 1.01 | |||||||
| 100 | 1.51 | |||||||
| 500 | 2.57 | |||||||
| 2000 | 4.18 | |||||||
| Old 500 | 3.09 | |||||||
| Old 1000 | 3.54 | |||||||
| (ii) | To boost digital economy and become totally digital in the next few years. | |||||||
| (iii) | Safer than Cash, Free from Mutilation, etc. | |||||||
| (iv) | To Reduce cost of UPI Transactions. | |||||||
| 4 | How will Digital Rupee work ? | |||||||
| Digital Rupee basically aims at replacing traditional currency notes in your wallets and could be used to make and receive payments via QR codes or through Mobile numbers regstered with Digital rupee wallets held by payer and payees. | ||||||||
| 5 | How to buy and use Digital Rupee ? | |||||||
| In order to buy digital rupee, users will need to go to the official app or website of the selected banks. | ||||||||
| You can buy digital Rupee from selected banks even if you don’t have an account with them. | ||||||||
| The process is same as withdrawing cash from your bank account where instead of receiving cash, bank will debit your account and credit your Digital rupee wallet. | ||||||||
| Digital Rupee which is actually digital cash can be sent to a person using through his/her Mobile Number or QR code. | ||||||||
| 6 | How is it Different from UPI ? | |||||||
| UPI is a facility that sends or receives money from one bank to another bank AND it involves entries in two bank account statements maintained by commercial banks while Digital Rupee is cash in your wallet and it would not make an entry in your commercial bank account and its records would be maitained by RBI itself. | ||||||||
| 7 | How is it different from Cryptocurrency ? | |||||||
| Cryptocurency is a risk-driven market and its value changes depending on the market conditions while Digital Rupee is just like cash money and its value remains the same thoroughout. | ||||||||
| 8 | Can I invest in Digital Rupee ? | |||||||
| Digital Rupee is not an instrument wich would earn you any interest on deposit. It is simply your cash in hand but in digital form. | ||||||||
| 9 | Advantages of Digital Currency : | |||||||
| (i) Safer and secure than carrying cash | ||||||||
| (ii) No Soiling or Mutilation | ||||||||
| (iii) Smooth and Hassle-free Transaction at no charges | ||||||||
| (iv) Easier to keep track of receipts and payments | ||||||||
| 10 | Disadvantages of Digital Currency : | |||||||
| (i) Loss of Privacy : Every transaction gets centrally recorded with the RBI | ||||||||
| (ii) Transfer Problems may arise due to internet connectivity | ||||||||
| (iii) Threat of cyber security amongst people | ||||||||
| (iv) Data may be used by govt. authorities like income tax | ||||||||
| BY – Ratan Sarraf | ||||||||
