Know what is E-Rupee? RBI is preparing to use it in offline mode

The Reserve Bank of India (RBI) is planning to launch offline e-Rupee transactions soon. RBI Governor Shaktikanta Das has made several announcements after the conclusion of the central bank’s three-day Monetary Policy Committee meeting on Thursday. This comes in the backdrop of the RBI’s high-powered rate setting panel today unanimously voting to keep the policy repo rate – the interest rate at which the RBI lends to other banks – unchanged at 6.5 per cent. This is the sixth consecutive time he has done so. This time RBI has also made an announcement regarding e-rupee. RBI has started work on a plan to use it in offline mode.

The e-Rupee, or digital rupee, is officially known as a Central Bank Digital Currency (CBDC). According to the website, e-Rupee is similar to a sovereign currency. It is exchangeable one-to-one at par (1:1) with fiat currency. This is only rupee in digital form. It is similar to sovereign paper currency, but takes a different form, is exchangeable at par with existing currency and will be accepted as a medium of payment, legal tender and secure store of value. CBDCs will appear as a liability on the central bank’s balance sheet.

RBI had listed several features of CBDC. This involves appearing as a liability on the central bank’s balance sheet. Being accepted by all citizens, enterprises and government agencies as a medium of payment, legal tender and secure store of value. Commercial bank money and is freely convertible against cash. Fungible legal tender that does not require holders to have a bank account. Money issuance and transaction costs are expected to reduce.

It also lists several benefits of a CBDC, including both person-to-person (P2P) and person-to-merchant (P2M) transactions, payments to merchants via QR codes, e-Rupee trust, security and Will offer final settlement. The bank said that unlike cash, no interest is earned on e-rupee. The bank said the e-rupee, like cash, can be converted into other forms of currency.

CBDC has some clear advantages over other digital payment systems, as it is a sovereign currency, ensuring finality of settlements and thus reducing settlement risk in the financial system. CBDCs can potentially enable more real-time, cost-effective seamless integration of cross-border payment systems. India has made impressive progress in innovation in digital payments. Payment systems are available 24X7, 365 days a year to both retail and wholesale customers, they are largely real-time, transaction costs are probably the lowest in the world, users have a range of options to make transactions and digital payments. There is a wide range. It has grown at an impressive CAGR of 55 percent over the last five years.

The Reserve Bank said its key motivations for launching a CBDC in India include reducing the costs involved in managing physical cash, enhancing financial inclusion, bringing flexibility, efficiency and innovation in the payments system, making the settlement system more efficient and promoting innovation. Giving is involved.

How to use it in offline mode?

RBI had launched a pilot program for retail CBDC in December 2022. Several banks including State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC participated in the pilot program across the country in Mumbai, New Delhi, Bengaluru and Was. The central bank had achieved the target of 10 lakh transactions per day by December 2023. RBI Governor Shaktikanta Das said additional programmability-based use cases will be introduced as part of the pilot project.