The RBI’s first digital token, called the ‘digital rupee,’ is now live as part of a pilot program.
You can now buy and trade India’s official digital currency, the e₹-R (digital Rupee), from select banks in select cities. If you’re looking to get your hands on some of this new currency, here are five things you should know about it first.
The digital Rupee, or Central Bank Digital Currency (CBDC), is different from traditional cryptocurrency in that it is backed by a central bank, the RBI.
The main difference between a cryptocurrency and the digital Rupee is that cryptocurrencies are decentralized, while the digital Rupee is issued and controlled by RBI. The central bank decides all the parameters for CBDCs.
The digital Rupee has a set value, meaning it does not differ based on transactional volume like cryptocurrencies. Also, the digital Rupee is a legal tender in India and can be used for P-to-P and P-to-M transactions.
The RBI has currently issued a license to four banks as a part of the pilot program. These banks are State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank and they can issue digital Rupee in India.
Shortly, four additional banks in India will be able to distribute digital Rupees. These are the Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank.
The digital Rupee is currently only available in Mumbai, New Delhi, Bengaluru, and Bhubaneswar. The digital Rupee will be accessible to residents of Ahmedabad, Lucknow, Hyderabad, Indore, Gangtok Guwahati, Kochi, Patna, and Shimla shortly.
How to buy a digital INR (Indian Rupee)?
The four designated banks mentioned above will offer the digital Rupee on their official app or website.
Presently, it is unclear if banks will permit users to buy digital Rupee through their regular apps or if they will need to release a new app/website exclusively for this purpose. With physical currency, one must have a bank account to complete transactions; however, no such requirement exists for digital Rupees.
Can you give a digital Rupee to a Friend or Family Member?
The digital Rupee can be shared with anyone, just like cryptocurrency. The only catch is that it can currently only be done on apps supported by banks licensed to issue these in India. These include wallets such as Paytm, which can be used for all sorts of transactions.
RBI (The Reserve Bank of India) has even gone so far as to state that the digital Rupee should occupy the same legal status as regular tender. This means that both private institutions and individuals are legally bound to accept it.
The digital Rupee is a welcome addition to India’s economy, as it shows that the country is looking towards an increasingly digital future. The pilot program looks to test the waters before making any decisions on whether or not to expand the use of this currency. But with RBI’s backing, it looks likely that the digital Rupee will become a widely accepted currency in the near future.
It will be interesting to see how this new currency fares in India and whether or not it will become a part of everyday life. Stay tuned for more news on the digital Rupee!
Shivendra Tiwari is an Engineer and an MBA in Marketing. He is the Content head at Marketing91 and a thorough Online Marketing enthusiast. Shivendra loves to follow different brands and study their Business and Marketing tactics.