{"id":34399,"date":"2022-11-30T06:37:26","date_gmt":"2022-11-30T01:07:26","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=34399"},"modified":"2025-04-20T13:15:16","modified_gmt":"2025-04-20T07:45:16","slug":"rbi-to-pilot-digital-rupee-for-retail-use-from-dec-1","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/rbi-to-pilot-digital-rupee-for-retail-use-from-dec-1\/","title":{"rendered":"RBI to Pilot Digital Rupee for Retail Use From Dec 1"},"content":{"rendered":"<h3><strong>What\u2019s in today\u2019s article:<\/strong><\/h3>\n<ul>\n<li><strong>Central bank digital currency (CBDC) \u2013 About, India\u2019s approach towards CBDC, rationale<\/strong><\/li>\n<li><strong>News Summary<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Why In News:<\/strong><\/h2>\n<ul>\n<li>The Reserve Bank of India\u2019s first pilot for a retail e-rupee, its version of the central bank digital currency (CBDC), will be launched on December 1.<\/li>\n<li>The pilot will cover select locations in a closed user group comprising participating customers and merchants.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Central bank digital currency (CBDC)<\/strong><\/h2>\n<h3><strong>About<\/strong><\/h3>\n<ul>\n<li>CBDC is the legal tender issued by a central bank in a digital form.\n<ul>\n<li>The digital rupee (e-Rupee) is the digital currency launched by Reserve Bank of India.<\/li>\n<\/ul>\n<\/li>\n<li>It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency, only its form is different.<\/li>\n<\/ul>\n<h3><strong>India\u2019s approach to CBDC<\/strong><\/h3>\n<ul>\n<li><strong>Budget 2022-23 announcements<\/strong>\n<ul>\n<li>In her 2022-23 Budget speech, the Finance Minister announced the launch of the Digital Rupee,\u00a0the name of the CBDC in India, from 2022-23\n<ul>\n<li>The Reserve Bank of India (RBI) will issue these in 2022-23.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Regulatory Framework<\/strong>\n<ul>\n<li>Currently, there is\u00a0<strong><u>no regulation or any ban<\/u><\/strong><u>\u00a0on the use of cryptocurrencies<\/u>\u00a0in the country.<\/li>\n<li>The Indian government is expected to introduce the\u00a0<strong>Crypto currency and Regulation of Official Digital Currency Bill<\/strong>.\n<ul>\n<li>It is expected to regulate the role of investment, transaction and use of private crypto currencies in the country, including working of CBDC.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Launch of Digital Rupee<\/strong>\n<ul>\n<li>Based on the usage and the functions performed by the digital rupee and considering the different levels of accessibility\u00a0<strong>RBI has demarcated the digital<\/strong>\u00a0<strong>rupee into two broad categories<\/strong>:\u00a0<u>general purpose (retail) and wholesale<\/u>.<\/li>\n<li>From November 1, 2022, RBI\u00a0launched its first pilot project to use digital rupee in the\u00a0<strong>wholesale market for secondary trade in government securities<\/strong>\u00a0(G-secs).\n<ul>\n<li>Wholesale CBDC has the potential to transform the settlement systems for financial transactions undertaken by banks in the government securities (G-Sec) segment, inter-bank market and capital market more efficient and secure in terms of operational costs, use of collateral and liquidity management.<\/li>\n<\/ul>\n<\/li>\n<li>From December 1,\u00a0<strong>retail digital rupee<\/strong>\u00a0(e-R) pilot will be launched.\n<ul>\n<li>In effect, the retail e-rupee will be an electronic version of cash, and will be primarily meant for retail transactions.<\/li>\n<li>It will be potentially available for use by all \u2014 the private sector, non-financial consumers and businesses.<\/li>\n<li>It will be distributed through intermediaries, i.e., banks.<\/li>\n<li>Transactions can be both person to person (P2P) and person to merchant (P2M) using QR codes displayed at merchant\u2019s locations.<\/li>\n<li>It will not earn any interest and can be converted to other forms of money, like deposits with banks.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><strong>Why RBI is launching e-Rupee?<\/strong><\/h3>\n<ul>\n<li>The key motivations for exploring the issuance of CBDC include\n<ul>\n<li>Reduction in operational costs involved in physical cash management,<\/li>\n<li>Fostering financial inclusion,<\/li>\n<li>Bringing resilience, efficiency and innovation in the payments system.<\/li>\n<\/ul>\n<\/li>\n<li>It will add efficiency to the settlement system and boost innovation in cross-border payments space.<\/li>\n<li>Introducing its own CBDC has been seen as a way to bridge the advantages and risks of digital currency.\n<ul>\n<li>Specially, concerns over money laundering, terror financing, tax evasion, etc. with private crypto currencies like Bitcoin, Ether, etc.<\/li>\n<\/ul>\n<\/li>\n<li>Being interoperable with other payment systems, it will complement existing techniques like UPI, thus completing the mobile payments ecosystem.<\/li>\n<\/ul>\n<h3><strong>News Summary:<\/strong><\/h3>\n<ul>\n<li>The RBI has announced that the\u00a0<strong>retail digital rupee (e-R) pilot<\/strong>\u00a0will launch on December 1 with four banks &#8211; State Bank of India, ICICI Bank, IDFC First Bank and Yes Bank.<\/li>\n<\/ul>\n<p><img decoding=\"async\" src=\"https:\/\/vajiramandravi.s3.us-east-1.amazonaws.com\/media\/editor_images\/2022\/11\/30\/12\/13\/22\/6386fb8ace3fd305af6b20b5_OI.PNG\" alt=\"\" \/><\/p>\n<h3><strong>Key highlights<\/strong><\/h3>\n<ul>\n<li>The e-R would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued.<\/li>\n<li>Like in the case of paper currency, the digital rupee would be distributed through banks.<\/li>\n<li>Users must use a digital wallet through a participating bank and store it on their mobile phone or device.<\/li>\n<li>Payments to merchants can be made using QR codes displayed at merchant locations.<\/li>\n<li>The pilot will test the robustness of the entire process of digital rupee creation, distribution and retail usage in real time.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The Digital Rupee or eINR or E-Rupee is a tokenised digital version of the Indian Rupee.<\/p>\n","protected":false},"author":5,"featured_media":34400,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-34399","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/34399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=34399"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/34399\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/34400"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=34399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=34399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=34399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}