The Reserve Bank of India (RBI) has officially launched its very first digital token called the digital Rupee as part of a pilot. The digital Rupee (e₹-R) will be available for purchase and trade starting today via select banks in select cities. If you are planning to buy India’s official digital currency, then here are five points that you should keep in mind about the digital Rupee.
The digital Rupee is different from traditional cryptocurrency. This is also known as Central Bank Digital Currency (CBDC) meaning it has the back of a central bank, in this case the RBI. The main characteristic of a cryptocurrency is that it is decentralised, whereas the digital Rupee is issued and controlled by RBI and it’s the central bank that decides all the parameters for the CBDC.
Unlike a cryptocurrency, where, the value fluctuates based on the transactional volume, digital Rupee will have a fixed value and is also considered a legal tender in India. Hence, the digital Rupee can be used for making person-to-person (p-to-p) and person-to-merchant (p-to-m) transactions.
As a part of the pilot program, RBI has issued a license to four banks — State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank can currently issue digital Rupee in India. Similarly, four more banks — Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will soon be able to distribute digital Rupee in India.
As of now, the availability of the digital Rupee has also been limited to Mumbai, New Delhi, Bengaluru, and Bhubaneswar. In the coming days, the availability of the digital Rupee will be expanded to Ahmedabad, Lucknow, Hyderabad, Indore, Gangtok, Guwahati, Kochi, Patna, and Shimla, enabling more users to buy this.
Users will be able to buy the digital Rupee from the official app or website from the four designated banks which are mentioned above. As of now, there is no exact information if these banks will allow users to buy digital Rupee from their existing apps or will release a new app/website just to handle digital Rupee. While one needs to have a bank account to transact with the physical rupee, digital Rupee does not require any bank account.
Yes, this can be shared with a friend or family just like a cryptocurrency. Again, this can only be done on the supported apps from the banks that have been licensed to issue these in India. The digital Rupee can be stored just like you store money on a Paytm wallet, which can be used for all sorts of transactions. RBI has even stated that the digital Rupee should be considered a legal tender by all institutions (both private and government) and individuals.
This can be used just like a physical rupee in most places. However, you won’t be able to withdraw it in the form of physical currency. However, the digital Rupee can be converted into cash via commercial banks. When you have money in your bank account, it usually attracts interest. When it comes to the digital Rupee, it won’t earn any interest and its value of it will remain constant.