e-Rupee

#GS-03 Economy

RBI and Digital Currency:

The Reserve Bank of India this week launched the digital rupee on a pilot basis.
The digital currency will be offered by a select group of public and private banks in a few major cities initially, which can be used for both person–to–person and person–to–merchant transactions.
The pilot will initially cover the four cities of Mumbai, New Delhi, Bengaluru, and Bhubaneswar, where customers and merchants will be able to use the digital rupee (e₹-R).
Four banks will be involved in the controlled launch of the digital currency in these four cities: State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank.
The service will be subsequently extended to the cities of Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
Four more banks — Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank — will join the pilot.

The digital rupee, or the e–rupee, is a central bank digital currency issued by the RBI.
It is similar to the physical cash that you hold in your wallet except that the e-rupee is held electronically in a digital wallet overseen by the RBI.
The digital rupee is recognised as legal tender by the RBI, and thus has to be accepted by everyone in the country as a medium of exchange.
Unlike deposits which are paid interest, the digital rupees in your wallet are not paid any interest by the central bank.
Deposits held in banks can be converted into digital rupees and vice-versa.