e₹ represents a direct claim on the central bank. I
Digital Rupee or e₹ is a legal tender, similar to sovereign paper currency, and is issued in digital form by the Reserve Bank of India.
The Reserve Bank of India had rolled out a pilot in the retail version of the central bank digital currency (CBDC e₹) on December 1, 2022. The e₹ is in the form of a digital token that represents legal tender.
It is being issued in the same denominations as the paper currency and coins. It is being distributed through financial intermediaries like banks. Users can transact with e₹ through a digital wallet offered by the participating banks.
This article brings to you some basic queries around the e₹, which are available on the official website of the State Bank of India.
What is a central bank digital currency (CBDC)?
“Digital Rupee” or “e₹” is a legal tender, similar to sovereign paper currency, and is issued in digital form by the Reserve Bank of India. e₹ offers features of physical cash like trust, safety and settlement finality with atomicity (i.e. immediate settlement of transactions) in digital mode.
e₹ represents a direct claim on the central bank. It can be used to carry out transactions or store value digitally, similar to the manner in which currency notes can be used in physical form.
What is a digital rupee wallet? / Where can digital rupee be held?
e₹ can be held in an e₹ wallet issued by banks. This wallet can be linked to your existing Bank (savings / current) account. The wallet is a digital representation of your physical wallet and e₹ can be withdrawn/ deposited from your existing bank account into this wallet.
Will e₹ replace cash, debit cards and credit cards?
No. Reserve Bank of India in its concept note states that e₹ is aimed to complement and create an alternate to physical currency and not replace current forms of money. It is envisaged to provide an additional avenue of handling money to users.
How is e₹ different from UPI or other fund transfer modes (NEFT/RTGS/IMPS)?
e₹ is a form of money, a digital representation of physical currency, whereas UPI or other fund transfer modes are forms of payment. Therefore, usage of e₹ is not limited to payments. e₹ also serves the purpose of ‘unit of account’ and importantly, ‘store of value’ as it represents a claim on the Reserve Bank’s balance sheet. Moreover, e₹ will have additional attributes specific to currency which will be tested in future pilots.
Who can use e₹?
In the first pilot of central bank digital currency – Retail (Digital Rupee – e₹), few customers have been selected to be a part of the Closed User Group (CUG) in a few locations.
How can e₹ be used?
You can transact in e₹ through a convenient and safe digital wallet being offered by the bank. This e₹ wallet will be like your physical wallet in digital form, on your android device. e₹ can be used to make payments to merchants and individuals, who are also included in the group, by using your e₹ wallet.
Payments to merchants can be made through a unique QR code displayed for this purpose at respective locations.
What is an e₹ Wallet?
An e₹ wallet is a digital wallet in your android device which will store your digital currency like the physical wallet stores physical currency. It may be mentioned that if you lose your physical wallet, retrieving the same is very difficult, however, in case of digital rupee wallet, the money is safe even if the device on which the wallet is saved, is lost as the same can be retrieved by creating the wallet protected by PIN.
Can you transfer e₹ directly to someone else’s bank account or UPI VPA?
No. e₹ can only be transferred to e₹ wallet. However, you can redeem e₹ from the e₹ wallet to your linked bank account.
Are there any charges/fees on using e₹?
No. There are no charges/fees associated with e₹ or e₹ wallets.
Is there any minimum balance required to open/ maintain an e₹ wallet?
No. There is no minimum balance required to open/ maintain an e₹ wallet.
