Know About E-Rupee

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The Central Bank Digital Currency (CBDC), often known as the digital rupee or the e-rupee, will shortly be made available for particular usage by the Reserve Bank of India (RBI). Retail and wholesale transactions using e-rupee have been specified as two general types.

Know About E-Rupee
  • The digital version of currency notes produced by a central bank is known as the CBDC, according to RBI. The Central Bank (in this example, the RBI) issues it as a sovereign or fully independent currency in conformity with the nation’s monetary policy.
  • Once it has been issued, CBDC will be accepted as legal money and a form of payment by all three parties—citizens, governmental entities, and businesses.
  • It is readily convertible into cash or notes from any commercial bank because it is government-recognized. The RBI opposes the use of the e-rupee with interest. Considering that this might lead to bank failure if individuals withdraw money from banks and convert it to the digital rupee.
  • In July 2022, 105 nations were investigating CBDC. Ten nations have introduced CBDC, with Jamaica’s JAM-DEX being the most recent. The first was the Bahamian Sand Dollar in 2020.

Cryptocurrencies and Central Bank Digital Currency (CBDC): Differences

Parts of the digital rupee system might be supported by the distributed ledger technology that underpins cryptocurrencies, although the RBI has not yet made a decision on this. Cryptocurrencies like bitcoin and Ethereum are ‘private,’ on the other hand. On the other side, the RBI would be the one that issues and manages the digital rupee.

What now?

  • CBDC may be divided into two major categories: general purpose (retail) (CBDC-R) and wholesale based on usage, the tasks the digital currency performs, and the various degrees of accessibility (CBDC-W).
  • The electronic equivalent of currency known as retail CBDC is largely used for retail transactions. The private sector, non-financial consumers, and businesses will all utilize it. The RBI has not, however, specified how the e-rupee might be applied to retail trade merchant transactions.
  • Wholesale CBDC is intended to only be accessed by a small number of financial institutions. In terms of operating expenses, the use of collateral, and liquidity management, it has the potential to revolutionize the settlement systems for financial transactions carried out by banks in the government securities (G-Sec) sector, the interbank market, and the capital market.


  • A token-based CBDC would be a bearer instrument similar to bank notes, and the recipient would be responsible for ensuring the ownership of the token is legitimate. It is thought that a token-based CBDC would be preferable for CBDC-R since it would be more analogous to actual money.
  • A system based on accounts would need to keep track of all CBDC holders’ balances, transactions, and account holders’ identities.
  • The ownership of the monetary balances is shown by this method, which is suitable for CBDC-W. In this instance, a middleman will confirm the identity.
  • Available in both online and offline modes: The offline capability will provide users the opportunity to conduct CBDC transactions offline, enabling access in areas with spotty or nonexistent internet connectivity.
  • The RBI believes that the danger of “double-spending” will still remain in the offline mode, though, because it will technically be able to utilize a CBDC unit more than once without updating the CBDC common ledger.

How will E-Rupee Work

e-RUPI is a cashless and contactless digital payment method that is sent to recipients’ smartphones as an SMS message or a QR code. Similar to a prepaid gift card, this may be redeemed at particular locations without the need for a credit card, debit card, mobile app, or internet banking. Without using any physical interface, e-RUPI will digitally link service sponsors with beneficiaries and service providers.


  • The central bank will be in charge of overseeing all facets of the digital rupee system, including issuance, account maintenance, and transaction verification, under the direct approach.
  • The central bank and other intermediaries (banks and other service providers, for example) would each perform their appropriate roles under an indirect approach. Consumer claims will be handled by the middleman on behalf of the central bank, which will issue CBDC to customers indirectly through intermediaries.


  • lowering the operational expenses associated with managing physical currency, promoting financial access, and improving the payments system’s robustness, efficiency, and creativity.
  • Give the general public access to uses for private virtual currency without the associated hazards.


  • The vulnerability of CBDC ecosystems to cyberattacks may be comparable to that of the present payment systems.
  • Large amounts of data are anticipated to be produced in real time by the CBDC. It will be difficult to use the Data effectively while both protecting its privacy and addressing issues with its anonymity.
  • The NFHS-5 additionally offers data separation based on the distinction between rural and urban areas. In remote areas, just 48.7% of men and 24.6% of women have ever used the internet. Therefore, CBDC may widen the gender-based financial inclusion barrier in addition to the digital gap.

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