Digital Rupee, e₹, and e₹ wallet: Everything you should know about this digital currency

Our lives have become increasingly digital, and this transformation has been rapid. The impact of digitisation can be seen in all aspects of Indian society, from basic household chores to the functioning of reputed organisations like banks, hospitals, schools, etc. The latest in this line of impact is our currency.

As part of the "Digital India" initiative, the Reserve Bank of India (RBI) has been implementing the Digital Rupee (e-Rupee) for specific use cases since November 2022. The e-Rupee is the latest step in India's digital revolution, providing citizens with an efficient and secure way to conduct digital transactions.

Considering that electronic wallets are still in their infancy, some questions will arise in the minds of consumers. Read on to find out all about what is digital e-Rupee and e-Rupee wallets.

What is Digital Rupee or e-Rupee?
 

Also known as Central Bank Digital Currency (CBDC), the e-Rupee is a digital form of currency notes issued by the central bank. Consumers need an e-Rupee wallet to carry and use digital currency. This wallet is bank-issued and can be linked to a bank account to load cash into it.

What are the advantages of the Digital Rupee?
 

Here are some of the key advantages of the e-Rupee –

1. Digital currency is a fast, secure, and reliable method of daily payments and monetary transactions
2. The Digital Rupee is a sovereign currency issued by the RBI. It is accepted as legal tender by government bodies, companies, and merchants as a reliable payment method
3. You can easily convert Digital Rupees into bank deposits and vice-versa
4. Like handling physical cash, having a bank account is unnecessary to perform Digital Rupee transactions, making it more accessible. However, you need a bank account linked to your digital wallet to load and withdraw money
5. Digital currency is immune to physical damage such as rips, tears, burning, etc.
6. Being regulated by the apex banking authority in India, it is secure from frauds/scams and has a very low risk of volatility
7. You can easily access your Digital Rupees from your mobile devices at your convenience

Will e-Rupee replace cash, debit cards, and credit cards?
 

No. e-Rupee will not replace existing forms of money but will act as an additional method for users to make payments. The RBI said, “CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems.”

What is the difference between Digital Rupee and cryptocurrency?
 

While the Digital Rupee is similar to cryptocurrency in terms of payments, safety, and reliability, it is not a decentralised currency like cryptos are. Cryptocurrencies are unregulated, which means there is no governing body to regulate their norms.

On the other hand, the Digital Rupee is a sovereign currency recognised as legal tender by the Government of India and other organisations. You can use this currency anywhere to make purchases and send money. Moreover, while cryptocurrencies fluctuate based on supply and demand, the Digital Rupee has a fixed denomination whose value will not change.

A significant difference between e-Rupee and cryptocurrency is that cryptocurrencies can be traded depending on price fluctuations, while e-Rupee cannot, and it works like a physical currency.

Who can use e-Rupee?
 

A few customer banks have been chosen to participate in the Closed User Group (CUG) in the first pilot of central bank digital currency for retail products such as e-Rupee loans and deposit products. IDFC FIRST Bank is one of them. IDFC FIRST Bank customers can use the currency, avail of its benefits, and get a glimpse of the future of digital currency in India.

What is an e-Rupee wallet?
 

An e-Rupee wallet is like ayour bank's e-Rupee app stores physical wallet in electronic form. Available on Android and iOS devices, the e-Rupee app of your bank will store your digital currency exactly as the bank currency notes are stored in the physical wallet.

How can I load money into my e-Rupee wallet?
 

Loading money into your e-Rupee wallet is easy and quick. You need to download the IDFC FIRST Bank Digital Rupee app and register using the number whitelisted and linked to your IDFC FIRST Bank account. Once you have registered successfully and your wallet ID is created, you can load the wallet through the IDFC FIRST Bank account or UPI apps on the same device by following the steps below –

1. On the app home page, tap ‘Load’

2. Enter the amount or select denominations by swiping up for the amount you want to add. Tap on ‘Load Digital Rupee’

3. You can choose any of the modes mentioned below to add Digital Rupees to your wallet and follow the onscreen instructions –

a) Transferring funds from your linked bank account

b) Transferring funds through different UPI apps

After successful PIN verification, the linked account will be debited, and the e-Rupee will be instantly credited to your digital wallet in the same denominatio.

How to redeem an e-Rupee wallet and transfer that to a bank account?
 

Redeeming Digital Rupees from the e-Rupee wallet is straightforward. All you have to do is –

1. On the app home page, tap 'Redeem'
2. Select denominations by swiping up for the amount you want to redeem. Tap on ‘Redeem Digital Rupee’
3. Choose the linked bank account to be credited and follow the onscreen instructions

After successful PIN verification, the linked account will be credited with the equivalent amount, and the e-Rupee wallet will be debited instantly.

How to use an e-Rupee wallet and pay with it?
 

e-Rupee wallet consumers can only perform wallet-to-wallet transfers for payments to start with. This means they can only make payments to -

1. Another user with a CBDC wallet (IDFC FIRST Bank and Non-IDFC FIRST Bank)
2. Merchants with CBDC wallet via QR code scan-and-pay mechanism

To transact using a digital wallet,

1. On the app home page, tap 'Send'
2. You can send the e-Rupee via Digital Rupee VPA or phone number of the beneficiary who has registered for the e-Rupee or scan the e-Rupee QR code

Transactional limitations of e-Rupee wallet
 

The Digital Rupee has the same denominations as the existing physical Indian currency, such as ₹0.50, ₹1, ₹200, ₹500, etc. There are, however, certain restrictions regarding holding capacity, per-day loading, per-day transfer, and per-day unloading.

Here are the key e-Rupee wallet limitations that you should be aware of -
 

The e-Rupee roundup
 

CBDCs offer several advantages over traditional currencies, such as faster and cheaper transactions, better financial inclusion and increased security. IDFC FIRST Bank is at the forefront of this revolution and is committed to providing its customers with the best possible access to digital currencies.