Reserve Bank of India introduced the Digital Rupee-Wholesale Segment (e-W) on November 1, 2022 and Retail digital Rupee (e-R) on December 01, 2022. "Digital Rupee" or "e₹" is a legal tender, similar to sovereign paper cu

CS Professional · Banking - Law & Practice · PYQS · June 2024
Reserve Bank of India introduced the Digital Rupee-Wholesale Segment (e-W) on November 1, 2022 and Retail digital Rupee (e-R) on December 01, 2022. "Digital Rupee" or "e₹" is a legal tender, similar to sovereign paper currency and is issued in digital form by the Reserve Bank of India. e₹ will offer features of physical cash like trust, safety and settlement finality with atomicity (i.e., immediate settlement of transactions) in digital mode. e₹ represents a direct claim on the central bank. It can be used to carry out transactions or store value digitally, similar to the manner in which currency notes can be used in physical form. e₹ can be held in an e₹ wallet issued by banks. This wallet can be linked to customers' existing Bank (Savings / Current) account. The wallet is a digital representation of Customer physical wallet and e₹ can be withdrawn / deposited from customers' existing bank account into this wallet. Based on the above information, answer the following questions: (i) How e₹ is different from UPI or other fund transfer mode (NEFT/RTGS/IMPS) ?

Answer & Explanation:

e₹ is a form of money, a digital representation of physical currency, whereas UPI or other fund transfer modes (NEFT/RTGS/IMPS) are forms of payment. Therefore, usage of e₹ is not limited to payments. e₹ also serves the purpose of 'unit of account' and importantly, 'Store of Value' as it represents a claim on the Reserve Bank's balance sheet. Moreover, e₹ will have additional attributes specific to currency which will be tested in future pilots by the Reserve Bank of India.

Topics: Digital Banking

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic