New Delhi: The Reserve Bank of India (RBI) launched India’s first digital rupee pilot project for the wholesale sector on November 1 in a historic move. On the retail side, a comparable trial will shortly begin. The Central Bank Digital Currency is another name for the digital rupee. It is a computerised representation of RBI cash notes.
The introduction of the digital rupee is being hailed as a significant step in India’s digital revolution. It will significantly alter how business is conducted. The regulator stated in a notification on October 31, 2022, “The use case for this pilot is the settlement of secondary market transactions in government securities.”
Read More: These plans allow NRIs to achieve post-retirement security; details here
Nine banks including the State Bank of India, the Bank of Baroda, the Union Bank of India, the HDFC Bank, the ICICI Bank, the Kotak Mahindra Bank, the YES Bank, the IDFC First Bank, and HSBC have been chosen to take part in the wholesale digital rupee pilot project.
The e-rupee is a virtual currency that simplifies, speeds up, and reduces the cost of making payments. It will facilitate frictionless digital transactions in electronic format. Users can pay directly, saving money on transaction fees.
Digital currency can be exchanged for money equivalent to paper notes because the CBDC is freely convertible against real money. To use e-rupees, unlike UPI, a customer does not require a bank account.
Read More: India, Singapore to link UPI, PayNow; money transfers to get cheaper for migrant workers
How Digital Currency will benefit India?
The digital rupee system, according to the RBI, will “support India’s digital economy, improve financial inclusion, and improve the effectiveness of the monetary and payment systems.” Cross-border transactions will increase and physical cash management costs will be significantly reduced, which will make running a bank’s cash management and operations much simpler.
Digital currency will also always have a lifeline because it cannot be physically lost or damaged. The hazards of Bitcoin volatility will be reduced.
The e-rupee will also reduce the operating costs associated with producing, distributing, and storing banknotes. The e-rupee can be extremely helpful in preserving the environment because it will lessen the need for paper. The future of commerce is a cashless one.
