RBI Concept note on Central Bank Digital Currency- e-rupee

Reserve Bank of India concept note on Central Bank Digital Currency

• The Reserve Bank of India said that ” Central Bank Digital Currency’s will offer the public with benefits of virtual currencies while ensuring consumer protection by avoiding the damaging economic and social consequences of private virtual currencies.”
• As reported by the Reserve Bank of India, the Central Bank Digital Currency (CBDC), also known as the “e-rupee (e),” would eventually begin a pilot launch.
• Reserve Bank of India defines CBDC as digitally issued legal tender from a central bank. It resembles paper currency but exists in digital form. According to RBI, it will be accepted as a form of payment and legal tender and will be exchangeable at par with the current currency.
• The central banks that issue the E-rupees do so in accordance with their monetary policies. On the balance sheet of the central bank, it appears as a liability.
• Reserve Bank of India announces that it is preparing for e-rupee trials as part of a planned implementation strategy designed to cause the least amount of disruption possible.
• People in remote locations with limited internet connectivity will be able to access financial services more readily thanks to the e-offline rupee’s capability.

Central banks issue E-Rupee – its Feature 

• It has suggested 2 key categories for the usage of the e-rupee: wholesale and retail, elevating the nation’s payment system to a new level in which both businesses and regular citizens will be able to utilise the digital currency without any issues for various transactions.
• In addition to the current means of payment, the e- will offer additional option. It is virtually identical to banknotes, but since it is digital, it is way simpler, quicker, and less expensive. It also provides all the benefits for transactions that other digital payment platforms do.
• The introduction of an e rupee will help the Indian economy reduce operating costs related to the maintenance of physical cash, increase the effectiveness of payment settlements, and encourage innovation in cross-border payments.
• E-Rupee is freely convertible to cash and money from commercial banks. The holders of this fungible legal money are not required to have a bank account.
• Using a distributed ledger technology (DLT) like Blockchain, records will be kept up to date. According to Reserve Bank of India, there will be “no potential of anonymous transaction,” and all Central Bank Digital Currency transactions will be capable of being tracked.
• According to the RBI, the e-rupee will likely follow a non-interest bearing design, similarly just like physical
• The e-rupee may emerge into a valuable data source for service providers looking for insights on financial product The data would also be very useful for enforcing anti-money laundering regulations.

Prime Minister Shri Narendra Modi via a video conference declared that dedicated 75 Digital Banking Units (DBUs) in 75 districts throughout the country.

• Governor of the RBI Shaktikanta Das & the union finance minister, also viewed the inauguration event online. To honour the country’s 75 years of independence, 75 Digital Banking Units (DBUs) were established in 75 districts around the nation.
• According to the PMO, Digital Banking Units (DBUs) will be physical locations where people can open savings accounts, check their account balances, print passbooks, transfer money, invest in fixed deposits, apply for loans, stop payment instructions for issued checks, apply for credit and debit cards, pay taxes and bills, and make nominations.
• As per PMO statement, Digital Banking Units (DBUs) will give customers year-round access to more affordable, practical banking goods and services through enhanced digital experience.

RBI : Central Bank Digital Currency (CBDC) is a digital form of currency notes i.e E- Rupee 

RBI Circular on Money Changing Activities

• On May 27, 2024, the Reserve Bank of India (RBI) issued Circular No. RBI/2024-25/39 A.P. (DIR Series) Circular No. 08, directed to all Authorized Persons in Foreign Exchange. This circular serves as a crucial reminder of the guidelines governing money changing activities, originally outlined in the FED Master Direction No. 3/2015-16 dated January 1, 2016, and subsequently updated periodically.
• The RBI’s Circular No. RBI/2024-25/39 A.P. (DIR Series) Circular No. 08 reaffirms the guidelines for money changing activities as outlined in the FED Master Direction No. 3/2015-16. Authorized Persons in Foreign Exchange must adhere to these guidelines, which include compliance with KYC and AML norms, maintaining accurate records, and fulfilling reporting obligations. This circular underscores the RBI’s commitment to ensuring regulatory compliance, market integrity, and consumer protection in the domain of money changing activities.