New Delhi: Aiming at upgrading the online money transaction, the Reserve Bank of India (RBI) has finally announced the much-awaited Digital Rupee on Tuesday.
The Central Bank Digital Currency (CBDC) or digital Rupee, has been long time coming, which caused many to compare it to cryptocurrency. Experts say both currencies are a world apart in many ways.
India's digital version of rupee will start on Thursday, December 1 as RBI has partnered with four banks for testing it.
Currently the RBI is testing what it said the "robustness of the entire process of digital rupee creation, distribution, and retail usage in real-time."
The first phase of the rollout will happen in banks including State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank in Mumbai, New Delhi, Bengaluru, and Bhubaneswar, India Today reported.
More banks to join the process include Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank.
Subsequently, RBI will offer the service in more cities including Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
It is highly likely for a large number of people to confuse digital Rupee with cryptocurrency however there is no connection between them.
While Crypto is based on Blockchain technology, digital Rupee, which is issued in the same dominations as paper currency and coins, is some kind of digital token that represents legal tender, according to the report.
Those who invested in crypto currency know only too well how volatile they are in terms of value. As for digital Rupee value remains the same all throughout.
Using digital Rupee you can buy goods because transaction in digital rupee can happen between individuals (between person to person as in P2P) and Person to Merchant (P2M).
"The e-Rupee would offer features of physical cash like trust, safety and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks," the central bank was quoted as stating.
One can make payments through e-Rupee using QR codes displayed in shops the way it is happening now with online transactions.