What is Digital rupee? How it works ? Know more about the digital rupee
The State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank will be the first four institutions to participate in the first round.
On December 1, 2022, the Reserve Bank of India (RBI) launched the retail trial for its digital currency. The RBI’s central bank digital currency (CBDC), often known as the e-Rupee or the “digital rupee,” is an electronic rendition of legal tender. The RBI has planned to roll out the retail digital rupee gradually, starting with a pilot program. Eight banks have been selected by the central bank for the initiative, which will be completed in two stages. The State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank will be the first four institutions to participate in the first round.
What does DIGITAL RUPEE mean?
RBI mentioned “A token-based CBDC is viewed as a preferred mode for CBDC-R as it would be closer to physical cash,” means, The Reserve Bank of India issued a concept note on October 7, 2022, which states that the central bank has suggested a token-based tiered architectural approach for the retail digital rupee. Similar to banknotes, a token-based CBDC is assumed to belong to the person holding it. In a CBDC system based on tokens, the recipient of a token will confirm that the token actually belongs to him. Similar to banknotes, a token-based CBDC is assumed to belong to the person holding it. In a CBDC system based on tokens, the recipient of a token will confirm that the token actually belongs to him.
How will it works ?
Users will be able to shop and make purchases at their nearby Kirana stores using digital rupees. The exchange of digital rupees can take place between individuals (P2P) and businesses (P2M) (P2M). The e-Rupee would provide characteristics of actual money, such as trust, safety, and finality of settlement. The central bank stated, “As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks,”
According to the RBI, consumers and businesses would get digital rupees through middlemen like banks. The bank will provide a consumer virtual money when they deposit money. The other partner banks have not made any concrete statements about how clients would be able to obtain digital rupees.
Users would be able to conduct transactions using e-Rupee using a digital wallet provided by the qualified banks and kept on mobile phones or other devices, RBI has previously stated. Similar to how online transactions are carried out, customers will be able to use QR codes displayed at merchant locations to make payments through e-Rupee.