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Digital rupee
The digital rupee (e₹), eINR, or e-rupee is a tokenised digital version of the Indian rupee, issued by the Reserve Bank of India (RBI) as a central bank digital currency (CBDC). The digital rupee was proposed in January 2017 and launched on 1 December 2022. It uses blockchain distributed-ledger technology.
Like banknotes it will be uniquely identifiable and regulated by the central bank. Liability lies with RBI. Plans include online and offline accessibility. RBI launched the Digital Rupee for Wholesale (e₹-W) catering to financial institutions for interbank settlements and the Digital Rupee for Retail (e₹-R) for consumer and business transactions. The implementation of the digital rupee aims to remove the security printing cost borne by the general public, businesses, banks, and RBI on physical currency which amounted to ₹49,848,000,000.[clarification needed]
In 2017, a high level inter-ministerial committee (IMC) was formed under the Department of Economic Affairs in Ministry of Finance (MoF) on the governance and usage of virtual currencies in India and recommended a digital form of fiat currency using Distributed Ledger Technology (DLT). The Department of Financial Services of MoF, Ministry of Electronics and Information Technology (MEITy) and the Reserve Bank of India (RBI) were invited to form a special group that will look into legal and technological development of CBDC. Without any official recognition of cryptocurrencies, RBI started planning on future CBDC development.
On 16 December 2020, the RBI announced a regulatory sandbox to test next generation technologies on cross border payments to collect field test data and evidence of benefits and risks on the financial ecosystem. On 29 January 2021, the Indian Government proposed a bill to ban trading and investments in cryptocurrencies while giving legal power to RBI for developing CBDC, termed as "programmable digital rupee" using the experience gained from handling Unified Payments Interface (UPI), Immediate Payment Service (IMPS) and Real-time gross settlement (RTGS) for distribution and validation purpose.
As per the Currency and Finance Report of 2021 released by RBI, CBDC backed by the sovereign must promote non-anonymity of monetary transactions and financial inclusion by direct transfers. It must be compliant with national and global money laundering and economic terrorism laws. The RBI initially planned the first stage of CBDC trials for December 2021; however, it was later rescheduled to Q1 2022, with a nationwide rollout planned in phases. As per Governor Shaktikanta Das, RBI is still in discussion whether to go with centralized system or use Distributed Ledger Technology. While the preliminary study will be conducted soon, RBI started internal evaluation on scope, legal framework, calibration, technology, distribution and validation mechanism of CBDC citing increase in digital transaction during the COVID-19 pandemic.
The Government of India is working on amendments for The Coinage Act, 2011, Foreign Exchange Management Act (FEMA), 1999, Information Technology Act, 2000 and Crypto-currency and Regulation of Official Digital Currency Bill, 2021 that will govern CBDC in the country.
The Department of Financial Services, Ministry of Health and Family Welfare and National Health Authority introduced e-RUPI on 2 August 2021 which is a prepaid person specific, purpose specific e-voucher based on QR code or SMS string that doesn't require bank account to make it leak proof. It is going to act as a precursor by highlighting the gaps in national digital payment infrastructure that needs further improvement before the nationwide launch of CBDC. At 2022 Union budget of India, Nirmala Sitharaman from the Ministry of Finance announced the roll out of the digital rupee starting from 2023. As per the International Monetary Fund, the digital rupee can help in currency management and cross border payments in view of high volume of inbound remittance.
The pilot in wholesale segment, known as the Digital Rupee – Wholesale (e₹-W), was launched on 1 November 2022, with use case being limited to the settlement of secondary market transactions in government securities. Use of (e₹-W), is expected to make the inter-bank market more efficient. Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk. The pilot in retail segment, known as digital Rupee-Retail (e₹-R), was launched on 1 December 2022, within a closed user group (CUG) comprising participating customers and merchants.
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Digital rupee
The digital rupee (e₹), eINR, or e-rupee is a tokenised digital version of the Indian rupee, issued by the Reserve Bank of India (RBI) as a central bank digital currency (CBDC). The digital rupee was proposed in January 2017 and launched on 1 December 2022. It uses blockchain distributed-ledger technology.
Like banknotes it will be uniquely identifiable and regulated by the central bank. Liability lies with RBI. Plans include online and offline accessibility. RBI launched the Digital Rupee for Wholesale (e₹-W) catering to financial institutions for interbank settlements and the Digital Rupee for Retail (e₹-R) for consumer and business transactions. The implementation of the digital rupee aims to remove the security printing cost borne by the general public, businesses, banks, and RBI on physical currency which amounted to ₹49,848,000,000.[clarification needed]
In 2017, a high level inter-ministerial committee (IMC) was formed under the Department of Economic Affairs in Ministry of Finance (MoF) on the governance and usage of virtual currencies in India and recommended a digital form of fiat currency using Distributed Ledger Technology (DLT). The Department of Financial Services of MoF, Ministry of Electronics and Information Technology (MEITy) and the Reserve Bank of India (RBI) were invited to form a special group that will look into legal and technological development of CBDC. Without any official recognition of cryptocurrencies, RBI started planning on future CBDC development.
On 16 December 2020, the RBI announced a regulatory sandbox to test next generation technologies on cross border payments to collect field test data and evidence of benefits and risks on the financial ecosystem. On 29 January 2021, the Indian Government proposed a bill to ban trading and investments in cryptocurrencies while giving legal power to RBI for developing CBDC, termed as "programmable digital rupee" using the experience gained from handling Unified Payments Interface (UPI), Immediate Payment Service (IMPS) and Real-time gross settlement (RTGS) for distribution and validation purpose.
As per the Currency and Finance Report of 2021 released by RBI, CBDC backed by the sovereign must promote non-anonymity of monetary transactions and financial inclusion by direct transfers. It must be compliant with national and global money laundering and economic terrorism laws. The RBI initially planned the first stage of CBDC trials for December 2021; however, it was later rescheduled to Q1 2022, with a nationwide rollout planned in phases. As per Governor Shaktikanta Das, RBI is still in discussion whether to go with centralized system or use Distributed Ledger Technology. While the preliminary study will be conducted soon, RBI started internal evaluation on scope, legal framework, calibration, technology, distribution and validation mechanism of CBDC citing increase in digital transaction during the COVID-19 pandemic.
The Government of India is working on amendments for The Coinage Act, 2011, Foreign Exchange Management Act (FEMA), 1999, Information Technology Act, 2000 and Crypto-currency and Regulation of Official Digital Currency Bill, 2021 that will govern CBDC in the country.
The Department of Financial Services, Ministry of Health and Family Welfare and National Health Authority introduced e-RUPI on 2 August 2021 which is a prepaid person specific, purpose specific e-voucher based on QR code or SMS string that doesn't require bank account to make it leak proof. It is going to act as a precursor by highlighting the gaps in national digital payment infrastructure that needs further improvement before the nationwide launch of CBDC. At 2022 Union budget of India, Nirmala Sitharaman from the Ministry of Finance announced the roll out of the digital rupee starting from 2023. As per the International Monetary Fund, the digital rupee can help in currency management and cross border payments in view of high volume of inbound remittance.
The pilot in wholesale segment, known as the Digital Rupee – Wholesale (e₹-W), was launched on 1 November 2022, with use case being limited to the settlement of secondary market transactions in government securities. Use of (e₹-W), is expected to make the inter-bank market more efficient. Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk. The pilot in retail segment, known as digital Rupee-Retail (e₹-R), was launched on 1 December 2022, within a closed user group (CUG) comprising participating customers and merchants.
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