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E-Rupee: A Solution in Search of a Problem?

Written by Deepanshu Bhandari - A Lead Anchor and Head of Research at Zee Business. He has over 15 years of experience in the financial markets tracking macro and micro factors of the Indian economy. He also wrote a primer on Digital Rupee


Digital Rupee India has taken the lead when it comes to rolling out Digital Currency. The Central Bank Digital Currency or Digital Rupee is in its testing phase currently and plans are underway to expand its usage. E-Rupee is not very different from currency notes. Both act as a store of value, one in digital form and one in physical form. E-Rupee provides an additional option for users to transact digitally for ease of use. Also remember, just like money in your wallet, E-Rupee will not earn any kind of interest. How can I use it? E-Rupee will be issued in the form of digital tokens. It would be issued in the same denominations as physical currency notes and coins for ease of use and early adoption. This means E-Rupee is available in denominations of 1, 2, 5, and 10 all the way up to 2000 rupees as is the norm currently. For transactions, users will first have to open a Digital Wallet with one of the selected banks. These wallets will be available via apps on phones for ease of use. Transactions can be done between two individuals or between an individual and a merchant (payment for goods and services). A simple QR code-based transaction can be done between individuals and merchants. Where is it available? 8 banks will initially offer digital wallets for use of E-Rupee. These are SBI, ICICI Bank, YES Bank and IDFC First Bank in Phase 1. Ultimately Bank of Baroda, Union Bank, HDFC Bank and Kotak Bank will also join the list. Initially, the project is available in Mumbai, New Delhi, Bengaluru and Bhubaneswar and will later extend to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. More cities will be added later. Difference vs UPI Comparisons between E-Rupee and UPI are inevitable. It is important to remember that Digital Rupee is nothing but your banknotes in Digital form. UPI is a platform that lets you transact electronically. It is a payment gateway that allows transactions from one account to another. Use so far Data is not easily available but estimates indicate transactions worth over 7,000 crores took place in November when the project was launched for wholesale transactions between banks and other corporate entities. At the individual level, the value of transactions in the first month is much lower. At the moment digital rupee transactions are confined to a closed loop, restricted to select banks and merchants. In tech parlance, the Digital Rupee is being viewed as a solution to a non-existent problem. The robustness of India's digital payment infrastructure and its increasing penetration has made the Digital Rupee as just another online payment module. It's a space where the user is already spoilt for choice. Users have already adapted to the existing system and see no actual use for E-Rupee. Also, the use of the E-Rupee doesn't simplify already existing procedures for digital payments, thus there is no real user interface benefit. There may still be light at the end of this tunnel. Experiments are underway to explore offline options for use of the Digital Rupee. Expanding the coverage to other cities and banks may also entice users. But in the end, the Digital Rupee will fight with other payment options for relevance and at the moment, it has a lot of ground to cover.

You can catch Deepanshu Bhandari live on air daily between 8-11 AM and 2-3.30 PM on Zee Business. Do follow him on social media for insightful updates -

Twitter: @deepdbhandari IG: @Bhandari.Deepanshu


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