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?
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.
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.
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:
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.