How to Buy and Use RBI Digital Rupee in India?

Updated on: Dec 28th, 2022 - 12:01:24 PM

6 min read

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On 1 December 2022, the Reserve Bank of India (RBI) launched a digital rupee in 4 Indian cities. Residents of Mumbai, Bengaluru, New Delhi and Bhubaneswar can now use digital wallets provided by the partnering bank to exchange digital rupees. 

Moreover, you can keep this wallet on mobile or other devices for online transactions. According to central bank’s guidelines, you can carry out digital rupee transactions with merchants and individuals. 

How to buy RBI digital rupee?

RBI, or the central bank of India, has selected eight banks to take part in phase-wise e-rupee pilot program. State Bank of India, ICICI Bank, Yes Bank,  and IDFC First Bank will comprise the first phase in the four cities mentioned above. Four other banks will join the pilot for the second phase soon.

These participating banks have launched their digital rupee app to make transactions more accessible. You should note that the e-rupee is a digital version of your cash or paper money and not a cryptocurrency. So, you can make transactions using QR codes displayed at shops or malls to pay with an e-rupee.

How to use digital rupee in India?

Take a look at the following points before you proceed with buying or making transactions with the digital rupee (e₹-R) pilot:

  • A closed user group (CUG) consists of participating merchants and customers. The e-pilot cover selected locations in CUG.
  • The e-rupee will be issued in the same denominations as followed by paper currency or coins. It is a digital token of the prevailing money that will be distributed through banks as an intermediary.
  • Your bank will offer a digital wallet that you can use on your smartphones or laptops for online transactions of e-rupee.
  • You can opt for both person-to-person (P2P) and person-to-merchant (P2M) transactions using QR codes displayed at malls or shops.
  • Though digital, the e₹-R comes with all features of physical cash like safety, settlement finality, trust, etc.
  • You can convert the digital rupee into other forms of money like bank deposits, but it will not earn any interest.
  • The e-rupee pilot will conduct a real-time assessment of the retail use of digital rupees, distribution, and the stability of complete creation. Furthermore, the RBI will evaluate different uses and aspects of the digital token according to this assessment.

Know the benefits and features of the digital rupee

Though the Central Bank Digital Currency (CBDC) is different from cryptocurrency in all aspects, it can be compared with crypto in fields of benefits. One of the notable benefits of CBDC is that government bodies and other companies accept digital rupees as legal tender, means of payment, safe deposit, etc

Let’s take a look at its benefits.

  • You can easily convert digital money into cash or commercial bank money.
  • As the digital rupee is a flexible legal tender, you can use it even if you don’t hold a bank account.
  • It cannot be destroyed by tearing apart, burning or any other physical damage.
  • Any other digital form of money cannot replace e-rupees.
  • Digital money is equal to paper currency. Hence, it will last as long as your paper money last.
  • Unlike cryptocurrency, the digital rupee is governed by the central authority. Thus, it has a low risk of being volatile and provides security to its user.

Types of RBI digital rupee to be launched in India

As per the central bank of India, two types of digital rupee will be launched in India, namely retail or general purpose (CBDC-R) and wholesale (CBDC-W). Non-financial consumers, private sectors, businessmen, etc., can use CBDC-R, while the use of CBDC-W is restricted to selected financial institutions such as interbank transfers. 

Thus, RBI launches the digital rupee in India to offer a safe and hazardless digital experience during monetary transactions. Besides, it does not come with a risk of volatility. It is just a digital form of your own physical money.

Frequently Asked Questions

What is digital rupee?

Digital rupee is an electronic form of paper currency. It allows users to purchase and spend money digitally by scanning QR codes. The central bank of India launched the digital rupee for a risk-free transaction process.

Where can I buy a digital rupee?

You can buy digital rupees from the four banks that the RBI has licensed. They are the State Bank of India, Yes Bank, ICICI Bank,  and IDFC First Bank. However, RBI will include some more banks in this pilot program in the recent future.

What is the difference between digital rupee and UPI?

UPI is an interface where you can make transactions of your physical money. However, digital money is another form of paper currency which can be withdrawn from a bank account.

Can I shop using a digital rupee?

Yes, you can use the retail digital rupee or CBDC-R to shop from a store or mall with the QR code that accept a digital currency. You can store the digital money in your digital wallet and spend it through online transactions. 

Can I transfer digital money to family and friends?

Digital money is your physical money in a digitalised form. So, you can make a transaction or send them to friends or family just as your physical currency. Both the person sending and accepting the digital money should have a digital wallet for the transaction.
 

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