Understanding the impact of digital rupee

Summary: With the launch of digital currency (e-Rupee) by RBI, India is expected to witness a substantial growth in the digitisation of money and take a step further towards facilitating a cashless economy.

28 Nov 2023 by Team FinFIRST

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With the pilot launch of Central Bank Digital Currency, India has taken a significant step towards digitising its financial ecosystem. Central Bank Digital Currency (CBDC) is the electronic version of the nation’s official currency and is issued by respective country's central bank. In India, the RBI (Reserve Bank of India) will issue this legal tender, also known as the digital rupee.

A number of reputable banks, including IDFC FIRST Bank, have been entrusted by the RBI to work on this pilot project, which aims to research and analyse CBDC’s impact on the economy, risks, benefits, and implementation methods.

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How to register for CBDC?

If you are an IDFC FIRST Bank savings account holder looking to register for the CBDC pilot project, the bank will send you an SMS on your registered mobile number or email on your registered email address, which will include a link to the e₹ (Digital Rupee) app.

Click on the link to download, and follow the step-by-step guide below to complete the sign-up/ registration process:

Click on start registration after reading and accepting the Terms & Conditions
Verify the SIM card for the registered mobile number
Click on Set App PIN and authenticate with your device password (PIN, Face Unlock, or Fingerprint)
Enter your name in the field provided and click on Choose Wallet
Enter your PIN in the first input field. Confirm your PIN in the second input field. Click on the "tick" button on numpad to proceed
"Wallet Successfully Created" will be displayed on your screen
Next, click on View Wallet Address, select Wallet, and then select "Link IDFC FIRST Bank Account"
Click on Continue to allow the app to fetch existing IDFC FIRST Bank accounts linked to the registered mobile number
Select the account you would like to connect with the wallet
Enter the last 6 digits and the expiry date of your Debit Card
A "Bank Account Linked Successfully" message will appear, indicating that the sign-up/registration process is complete
You can now use e₹ (Digital Rupee) and enjoy CBDC's benefits

Once you have successfully registered for the CBDC pilot project, you can effectively improve efficiency and accessibility in handling your payments.

To deregister from the digital wallet, follow the below-mentioned steps:

Open the digital wallet and click on "Settings"
Choose "Deregister Wallet"
You will receive a PIN to verify the same
Once the PIN is entered and submitted, your wallet will be deregistered
Do note, you will be prompted to unload any unspent balance in the wallet before deregistering after wallet PIN verification.

How to use digital rupee in India?

For using CBDC, the first step would involve understanding how to convert existing funds from your bank account into digital rupees. Get started by completing the registration for your e-rupee wallet. Once you have successfully registered with IDFC FIRST Bank’s digital rupee app, the bank will send you a notification via SMS regarding your selection for the Closed User Group (CUG). You can then start loading money in your e-wallet from your linked bank account or from any UPI app. After this, you can start completing transactions with your digital rupee wallet.

You would now be able to use the QR codes displayed at shops/malls and engage in both P2P (person-to-person) and P2M (person-to-merchant) transactions. Since CBDCs are simply a digital version of the prevailing money distributed through banks, the e-rupee will have the same denominations as followed by paper currency. Apart from financial transactions, CBDCs can be converted into other forms of money such as bank deposits. However, do note that funds stored in the digital wallet would not be able to earn any interest .

In Conclusion

Once launched for the wider public, CBDC will complement physical currency notes and offer another mode of digital payment. Backed by the central bank, the CBDC in India will not only be safe but will also be instrumental in bolstering India's economy and improving financial inclusion. Its other benefits for users and the government includes faster payments, decreased money management cost, etc., and it will also help the nation achieve a cashless economy.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank 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 mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.