Digital Rupee (e₹): India’s CBDC Explained for Exams
Why in the news
An explainer on India’s CBDC covered retail and wholesale pilots and how they differ from UPI.
Key facts
- Mirrors the value of physical ₹; held in a mobile wallet.
- No interest and no fees; same denominations as notes and coins.
- Pilot banks (15) plus some non-banks; SBI, ICICI, HDFC, YES, Axis, Union Bank, Bank of Baroda, PNB, Indian Bank among them.
- Works for P2P and P2M payments with CBDC or UPI QR codes; wallet recoverable if the phone is lost.
e₹ versus UPI
| Feature | e₹ | UPI |
|---|---|---|
| Nature | Currency in digital form | Payment interface |
| Settlement | Wallet to wallet | Through bank accounts |
| Store of value | Yes | No |
Advanced features
- Offline mode for weak connectivity (under testing).
- Programmability: funds can be earmarked, such as for subsidies.
Wholesale CBDC (e₹-W)
- For interbank and large-value settlement; used in G-Sec and call money transactions.
- Offers smart contracts and lower settlement risk and cost; 14 institutions in the pilot.
Exam angle
- Issuer: RBI.
- Goals: payment efficiency, financial inclusion, monetary innovation.