How to Buy and Use RBI Digital Rupee in India?

By Mayashree Acharya

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Updated on: Jun 8th, 2024

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6 min read

On 1 December 2022, the Reserve Bank of India (RBI) launched a digital rupee (e₹-R) 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. 

Digital rupee, also known as digital currency, is virtual money. It serves the same purpose as physical money. The value of digital rupee and physical money are the same, i.e. 1 digital rupee = Rs. 1 cash. The RBI issues digital rupee while the banks manage the distribution of the Central Bank Digital Currency (CBDC). According to the 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 the phase-wise e-rupee pilot programme. 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 - Union Bank of India, HDFC Bank, Bank of Baroda and Kotak Mahindra Bank, will join the pilot for the second phase soon.

These eight participating banks have launched their digital rupee app to make transactions more accessible. The process to buy digital rupee is as follows:

  • You need to visit the participating bank’s official app or website. Currently, only the 4 banks mentioned above are issuing digital rupee to users in 4 cities. 
  • Next, you need to register to use the e-rupee wallet. 
  • Banks will inform you when you are selected for the Closed User Group (CUG) via SMS and email to participate in the digital rupee pilot programme. 
  • After the registration is done, you have to load money into the e₹-R wallet. The e₹-R wallet is similar to a physical wallet but is in digital form on your phone.
  • You can load money into the e₹-R wallet from the account linked to the bank or from various UPI apps.
  • Once you load money into the wallet, you can start transacting in e-rupee. 

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 the 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:

  • The RBI issues the retail digital rupee as an electronic token. 
  • 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, 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, according to this assessment, the RBI will evaluate different uses and aspects of the digital token.

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 deposits, etc

Let’s take a look at its benefits.

  • The CBDC is a sovereign currency issued by the RBI in accordance with their monetary policy.
  • 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 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 a digital rupee?

A 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 programme in the recent future.

What is the difference between the 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 accepts 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.

Is digital rupee similar to cryptocurrency?

No, digital rupee and cryptocurrency are different and are not linked to one another. Crypto is based on blockchain, while e-rupee is not. Cryptocurrency is a risk-driven market and its value changes depending on the market conditions while the value of digital rupee is fixed. Its value remains the same throughout, just like the value of physical cash.

What are the examples of digital rupee?

  • Digital wallets
  • NEFT
  • IMPS

Which other countries have digital rupee?

other countries that have their own digital currency(CBDC) are Nigeria, Bahamas, Russia, China etc. Whereas in countries like USA and Iran it can be launched soon.

Related Articles: 
Rupee Symbol in Word

 

About the Author

I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more

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Quick Summary

The Reserve Bank of India launched digital rupee in 4 cities, allowing residents to make digital transactions. The digital rupee carries the same value as physical money and can be used for various transactions. Users can buy digital rupees through participating banks and use them for person-to-person and person-to-merchant transactions. RBI aims to assess the retail use of digital rupees and its stability. The launch includes retail and wholesale digital rupee types.

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