E-RUPEE: A REVOLUTIONARY STEP TOWARDS DIGITIZING INDIAN ECONOMY

Jay Patel | 02 DEC 2022

Digital payments especially UPI usage among young population is exploding and according to latest study by Phonepe and Boston Consulting Group (BCG), “India's digital market is expected to reach $10 trillion by 2026”.

Today it would be still unimaginable for majority of Indian population to understand cashless Indian economy and how rapidly we have transcended from traditional way of physical cash transfer to digital wallets transfers. Digital payments especially UPI usage among young population is exploding and according to latest study by Phonepe and Boston Consulting Group (BCG), “India's digital market is expected to reach $10 trillion by 2026”. Witnessing phenomenal success of UPI, RBI introduced India's first official digital currency e-Rupee. Lets understand what e-Rupee is?

What is e-Rupee?

RBI's Central Bank Digital Currency (CBDC) is simply an electronic form of cash stored as digital tokens and would mainly be used for the purpose of retail transactions. e-Rupee would be just like crypto currencies tokens and will bear same denominations as current fiat currencies.

RBI has initially launched e-Rupee pilot retail project on December 01, 2022 in four major cities including Mumbai, Delhi, Bhubaneswar and Bengaluru with four banks be responsible for controlled launch of e-Rupee. These four banks include: SBI, ICICI Bank, Yes Bank and IDFC First Bank.

How will e-Rupee Work?

e-Rupee would be stored in digital wallet offered by respective banks. User can transfer or transact e-Rupee using these wallets stored on mobile phones or any other devices. Users can transfer from one person to another or to merchants through scanning QR codes. Customer can transfer e-rupee to their digital wallets from bank or scanning QR code of another person. In order to ensure privacy, e-Rupee stored in digital wallets would not be traceable by either banks or CBDC.

Benefits

We have heard technology is blessing in disguise. With introduction of digital rupee, RBI would be able to save huge amount on printing cost and they can efficiently manage currency circulation in the economy. E-Rupee would emerge as best solution for Indian government's by eliminating problem of black money and counterfeit currency. Let's see how it would be beneficial for users:

  1. Use of e-Rupee is convenient and hassle free. e-Rupee can be used by anyone on any phone or device. It doesn't require use of Smartphone or internet services to transact in e-Rupee.
  2. e-Rupee can be used in remotest part of our country with ease.
  3. e-Rupee solves out problem of ripping off currency notes and fake currencies.
  4. e-Rupee also ensures protection from thefts and other criminal activities unlike physical currency.
  5. Users don't need to carry wallets all the day.

With Successful launch of e-Rupee's first phase, we would see CBDC to rollout second phase of e-Rupee pilot retail projects into different other cities like Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla involving other banks including Bank of Baroda, HDFC Bank, Union Bank of India and Kotak Mahindra Bank into its ecosystem in timely manner.

Disclaimer: This article has been written by Jay Patel - Our Senior Research Analyst and originally published on Smart Investment website.