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What is Digital E-Rupee? Benefits

Updated on: 16 Jan, 2024 05:49 PM

On Dec 1, 2022, RBI announced its inclusive and ambitious pilot of India's first Digital E-Rupee (e₹-R). However, the pilot is currently being tested. Many BUZZ related to this launch started moving around. Leaving the U.S.A. far behind, India finally enters the group of particular countries that have soared their government-issued currency or fiat money. It is worth it as some other fiat currency circulated in the country. At FICCI's Banking Conference, Mr. Shaktikanta Das, Reserve Bank of India (RBI) Governor, announced that the latest e-rupee launch would be a landmark moment. It will transform the way online transactions are being done. He stated the benefits of Central Bank Digital Currency (CBDC), entailing all its aspects in domestic currency.
Digital E-Rupee- e₹-R is the Central Bank Digital Currency (CBDC) for the retail marketplace backed by Indian government authority. It acts as a legal token or digital fiat currency. Earlier, only physical fiat currency such as paper notes and coins were circulated by the RBI- Reserve Bank of India. Go to its guide to unveil this new digital trend.

Use India’s first Tax-Planning Optimizer Tool before the due date.

What do you mean by Digital E-Rupee?

The Digital E-Rupee (the pilot of e₹-R) is a legal tender. Selective Indian banks distribute it. It owes all the features of physical fiat money- paper cash & coins circulated in the present Indian marketplace. You can avail of its benefits in the same denominations as cash using the digital wallet or e₹ wallet.

Consult our CA for Tax filing for AY 2022-23 and other Digital Rupee related issues.


How to Invest in Digital E-Rupee?

However, banks are the legal entities that will provide you e₹ wallet. Therefore, there is no compulsion for who can use e-rupee. Even there is no need to have a bank account to use Digital E-Rupee in retail. As of now, in part of the pilot launch, four banks are licensed to issue Digital E-Rupee for Indian residents. These banks are — the State Bank of India, Yes Bank, ICICI Bank, and IDFC First Bank. So if you want to buy a Digital E-Rupee, keep visiting these banks' official websites for further details.

Later, four more banks shall join the list to fuel financial inclusion. These banks will be — the Bank of Baroda, HDFC Bank, Union Bank of India, and Kotak Mahindra Bank.


Is Owning the Digital E-Rupee a Good Idea?

Yes, it is. RBI, India's central bank, backs the Digital E-Rupee. It is a legitimate form of future money. It will undoubtedly be a game-changer in the history of the Indian economy. It restricts the parallel economy. Or in other words, it outlooks the vulnerabilities and risks associated with cryptocurrencies like Bitcoin, Tether, XRP, Etherium, etc.

Moreover, you can easily make P2P (people-to-people) or P2M (people-to-merchant) transactions using it. You need to scan the relevant QR code, and payment will be made within a few seconds. Likewise, it helps in making cashless societies a safer place.


How does the Digital E-Rupee work?

Via Digital E-Rupee or e₹ pilot, the RBI aims to provide a stable monetary policy for domestic users. People can buy the e₹ wallet from the selective banks or financial institutions allotted to do so. However, this e₹ token pilot is in the testing phase. Therefore, people can check its accessibility, stability, availability, and transparency in real time.


Is Digital E-Rupee different from UPI?

Yes, the Digital E-Rupee and UPI are entirely different concepts. Digital Rupee doesn't support physical fiat money (paper cash). At the same time, UPI transactions are backed by paper cash or physical capital. The regulator (RBI) bought the Digital E-Rupee or CBDC (Central Bank Digital Currencies) to eliminate digital fraud.


Which banks are issuing Digital E-Rupee?

Initially, in the pilot launch, four Indian banks got the license to issue Digital E-Rupee. The names of the banks are — the State Bank of India, Yes Bank, ICICI Bank, and IDFC First Bank.

Later, if the trial is successfully executed, four more banks shall be issuing it. These banks shall be —HDFC Bank, Union Bank of India, Bank of Baroda, and Kotak Mahindra Bank.


In which cities the Digital E-Rupee is available?

At present date, there are four cities where these digital currencies (digital rupee) are available. These cities are Mumbai, Bengaluru, New Delhi, and Bhubaneswar. Later the number of cities will gradually extend. Gangtok, Guwahati, Ahmedabad, Hyderabad, Indore, Lucknow, Patna, Kochi, and Shimla shall join this set in the future.


Why do you need Digital E-Rupee?

Digital E-Rupee is a sovereign currency issued on Dec 1, 2022. It is a pilot of the CBDC (Central Bank Digital Currency) concept introduced by the Central Bank of India. This pilot aims to provide an additional payment avenue to Indian users. However, it is not a replacement for cash. It simply adds value to the virtual currency by restricting the fluctuations in its value. In short, it offers financial stability and sustained growth to the country.


Who issues Digital E-Rupee?

From now on, four participating banks— the State Bank of India, Yes Bank, ICICI Bank, and IDFC First Bank, are issuing Digital E-Rupees retail. So if people want to buy India’s most promising Digital E-Rupee, they should go to these banks’ official websites for further details. Later, it will be available at four more banks— the Bank of Baroda, HDFC Bank, Union Bank of India, and Kotak Mahindra Bank.


Yes, it is legal. It is safer than any other digital currency (Cryptocurrency). It owes authenticity to any trading between person-to-person or person-to-merchandiser.


Can we convert Digital E-Rupee to cash?

Absolutely. You can convert your Digital E-Rupee to cash from commercial participating banks.


Is Digital E-Rupee the same as Cryptocurrency or Bitcoin?

No, it is not. It is much safer than any digital currency such as Cryptocurrency, Bitcoin, etc. RBI backs digital E-Rupee. It is contemplated as a legal tender that will have a fixed value. In contrast, traditional Cryptocurrency faces massive fluctuations in its value. See the taxation on Cryptocurrency for a better understanding.


Why RBI launched Digital E-Rupee?

According to Mr. Shaktikanta Das, the Reserve Bank of India (RBI) Governor, to keep pace with the changing business world. It is essential to bring a legal virtual currency to the country. It reduces the production cost of physical fiat money. Plus, Digital E-Rupee is full-fledged trackable, accessible, and secure by the nation’s authority.


Is Digital E-Rupee the Future?

It is commendable that societies are accepting online payments like never before. Everyone starts doing online transactions via leading payment apps, from small street vendors to big enterprises. Digital E-Rupee is widely and easily accessible. It will surely optimize the critical online market of India. It brings people one step closer to a future-ready economy.


Can Digital E-Rupee replace cash in the future?

Money has evolved throughout the years. The CBDC, Cryptocurrencies, stablecoins, or any other digital payment are some popular examples of it. The increased usage of digital currencies leads to the demission of physical capital or cash. Because Digital E-Rupee is one step ahead, it is risk-free fiat money. It will make way for a cashless and safe economy in India.


What is CBDC?

The CBDC or Central Bank Digital Currency is a digital token. In India, RBI launched its pilot CBDCs. Thinking that it will surely boost the Indian economy. In this context, the digital E-Rupee is an authentic digital token for the Indian market. It has the same value as paper cash or coin holds. Further, people can buy it using a digital e-wallet. Anyone can make payment transfers using the digital E Rupee, even if they don’t have a bank account.

These regulated currencies have stable values. Through this move, the government counters private currencies.


How does Digital E-Rupee eliminate payment fraud?

Digital E-Rupee, or the CBDC, is an excellent opportunity that offers regulated traceability. It improves resilience, trust, and ease of usage. Likewise, it leverages the entire payment system by reducing fraud.


What is the future of the Digital E-Rupee in India?

RBI hit the mark by putting its next leg in launching the first digital currency for India. The authority will likely consider Digital E-Rupee a seamless substitution for paper cash in India. At present date, its pilot is in the testing phase. If everything runs as aspected, then it will serve the intent to focus on upcoming future pilots. Share your concerns with our CA now.


Frequently Asked Questions

Q- What is a digital rupee?

The digital rupee or E-rupee is a pilot of the digital token issued by RBI.


Q- Who launched the digital e-rupee and when?

The central bank of India- RBI launched the first pilot of the digital rupee on Dec 1, 2022.


Q- How can I buy a digital e-rupee in India?

The Indian residents can buy a wallet of digital e-rupee from selective banks- the State Bank of India, IDFC First Bank, Yes Bank, and ICICI Bank.


Q- Is the digital rupee available at banks?

Yes, it is. But not at all banks. Only selective banks are allowed to issue digital rupees as of now.


Q- Are digital e-rupee and UPI the same?

No.


Q- Is the digital e-rupee is same as other digital currencies?

No, digital currencies vary their values as per the fluctuations of the market. But the digital e-rupee has a fixed value. It owes the same denominations as paper note owes.


Q- What is the price of a digital e-rupee?

1 E-Rupee= ₹ 1


Q- Is the digital rupee a good investment?

The E-Rupee or digital rupee is a future-ready currency that is backed by RBI. It is safe, traceable, and easily accessible by the people of India.


Q- Can digital e-rupee be hacked?

No, it is the safest digital token backed by the central bank of India.


Q- Is the digital e-rupee real money?

Yes, it is similar to paper cash or note we use.


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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.