What is Digital Rupee (e-Rupee)? How Does It Work?

Posted on Wednesday, November 13th, 2024 | By IndusInd Bank

The financial vertical is witnessing a transformation, and India is at the forefront with its introduction of the digital rupee, also called the e-Rupee. This innovation represents a considerable leap toward modernising the financial system. But what exactly is the digital rupee and how does it differ from other forms of money used today?

Explored here is a guide on the concept of digital currency, how it works, and why it could play an essential role in the financial future.

What is the Digital Rupee?

The digital rupee, or e-Rupee, is a digital form of Indian Rupees (INR), created and regulated by the Reserve Bank of India (RBI). Unlike cryptocurrencies like Bitcoin, which function on decentralised networks, the digital rupee is a Central Bank Digital Currency (CBDC) under the control of the RBI.

This ensures that the e-Rupee carries the same value as conventional cash. The fundamental goal of introducing the digital rupee is to enhance the transparency, efficiency, and security of financial transactions, offering an up-to-date alternative to both cash and traditional electronic payment methods.

How Does the Digital Rupee Function?

The digital rupee works the same as physical cash but in a digital format. Imagine it as electronic cash that you store in your digital wallet, allowing you to make payments, transfer funds, and keep your funds safe – all without requiring physical currency or even a conventional bank account.

Transactions performed with the digital rupee are recorded on a digital, secure ledger managed by the RBI. This ensures that every transaction is traceable, transparent, and immune to counterfeiting, offering a high level of security.

Issuing and Acquiring the Digital Rupee

The issuance of the digital rupee is managed by the RBI, which creates a digital equivalent of physical currency. This digital currency is then distributed to financial institutions, which in turn make it available to the public through digital wallets and other electronic platforms.

Acquiring the digital rupee is simple – you can access it using existing digital wallets through authorised financial institutions, just as you would convert your physical currency into an online payment wallet.

Using the Digital Rupee in Daily Life

The digital rupee is designed for ease of use, making it an appealing option for daily transactions. Here are some of the ways you can incorporate it into your daily life –

1) Shopping

Pay for goods and services securely and quickly without the stress of carrying physical cash.

2) Transfers

Instantly send funds to anyone, anywhere in India, whether they are close by or far away.

3) Savings

Store your digital rupee in a digital wallet, ensuring your funds are accessible and safe.

Digital Rupee vs. Savings Account: Why You Should Diversify?

While the digital rupee offers various advantages, it is crucial to understand that a savings account too is a must-have financial instrument owing to the benefits offered by it. Money in a savings account, particularly one with a reputable financial institution like IndusInd Bank, comes with add-on financial benefits, including interest earnings, rewards and cashback offers.

Unlike the digital rupee, which is completely transactional, a savings account can help you grow your wealth over time while offering mental peace and financial security.

To maximise your financial well-being, it is wise to diversify how you store your funds. The Indus Delite Savings Account offers a range of benefits that complement the convenience of the digital rupee. These benefits of this zero-balance savings account include:

Note: You have to apply for the Delights Debit Card separately either when opening your zero-balance account or at a later stage.

Also Read: Diversifying Your Savings: Combining Online Savings Accounts with Other Investments

Ending Note

The introduction of the digital rupee marks a considerable step toward the digitalisation of India, offering a transparent, secure, and efficient way to perform transactions. However, it is essential to maintain a balanced approach by also using savings accounts. The Indus Delite Savings Account not only keeps your funds secure but also enhances your financial health with added benefits like rewards, cashback, and zero balance requirements.

So, do not rely solely on the digital rupee—open an Indus Delite Savings Account today and enjoy both options.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.