How to Buy and Use RBI’s Digital Rupee

RBI has launched its Digital Rupee (digital currency) pilot project on 1 December 2022. Value of 1 Digital Rupee will be equal to 1 Rs. Cash. This means that digital currency will be a digital form of paper money. The main objective of making this will be to eliminate paper cash gradually so that the cost of making and transporting of paper money can be reduced.

In Short

• RBI has launched its digital currency pilot in four cities (New Delhi, Bangalore, Mumbai and Bhubaneswar).
• Here digital currency (or e-Rupee) is not like cryptocurrency in any way.
• Digital Rupee is only digital form of paper money (Cash). Its value will be exactly equal to cash or paper money.

Central bank of India has launched pilot of digital currency in four districts for first phase (New Delhi, Mumbai, Bengaluru, and Bhubaneswar). For this, RBI has partnered with eight banks (ICICI Bank, SBI, Bank of Baroda, Union Bank of India, Kotak Mahindra Bank, HDFC Bank, Yes Bank and IDFC First Bank). The second phase will involve expanding to cities such as Indore, Kochi, Lucknow, Patna, Guwahati, Hyderabad, Shimla, and Gangtok.

This article will explain how digital currency operates, its applications, and the benefits it offers to the user.

What is Digital Rupee?

It is a digital token to represents legal tender in India. Initially it looks like UPI payments but actually it is not. UPI is a digital payment system which facilitates banking transactions but Digital Rupee (e-Rupee) is a currency in digital form. We can withdraw E-Rupee from the bank in the same way that we withdraw physical cash.

In what ways does Digital Rupee differ from Physical Cash or Paper Money?

Digital Currency (Rupee) is the digital form of paper money but handling digital money is much easier and much cheaper than paper money (cash). The value of digital currency (e-Rupee) is exactly the same as that of cash or paper money.

How to get Digital Rupee?

To get the digital money wallet, the user has to visit the official website (or app) of any of the designated banks (banks that have partnered with RBI).

• Download App.
• Open Digital Rupee Application.
• Select Sim Card to Verify.
• Setup App PIN for Login Purpose.
• Select your Wallet Type (Basic Wallet or Minimum KYC Wallet)
• Set you Wallet PIN to transfer money.
• Link it to your Bank Account.
• Load digital currency token (e-Rupee) in Your Wallet.
• Now you can start using Digital Rupee Wallet as per your need

Note: These steps may be differed to bank to bank.

Benefits of Digital Rupee

The user needs to store the digital money in the same way as they store it in PhonePe and Paytm wallets. Then the user can use it when needed.

• User can buy stuff.
• User can transfer money to friends and family.
• User can transfer money to any other user (P2P).
• User can transfer money to any merchant (P2M).
• No need to carry Physical Money in wallet.

Other Benefits are:

• It is a fast way to send and receive payments.
• Lower transaction cost for user.
• Real time settlement of accounts and ledger maintenance.
• May or may not need a bank account to use Digital Money.
• It is very cheap so that the user can use it for cross border payments and settlement of securities.
• It is not volatile.
• It is available to the user 24×7.
• It is trackable and can not be forged.

As mentioned above in this post, all money transfers are allowed only with banks designated by RBI.

Is Digital Rupee Same as Cryptocurrency?

To some extent it is similar to cryptocurrency but not majorly.

• It is not same as Cryptocurrency.
• It is not based fully on blockchain technology while cryptocurrency is based fully on blockchain technology.
• Digital Currency is CBDC (Central Bank Digital Currency) and it is regulated by Government authority (controlled by Government) while cryptocurrency is not regulated by any authority.
• The value of the Digital Currency (Rupee) is exactly the same as its paper money (cash) value, while cryptocurrency values ​​are volatile (its value fluctuates depending on market conditions).

Conclusion

With the launch of Digital currency, RBI seeks to address the problems associated with paper money. It is difficult to easily trace paper money, but digital currency is traceable. People do not need to carry cash in their wallet all the time and their digital currency on mobile will help in every way. The main goal of RBI to save money on printing, storing and distributing paper money (physical cash).

Now it will be a matter to be seen how and how soon people adopt it. Digital currency is the currency of the coming future and almost every country is engaged in implementing it. Your mobile will now be your money.

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