The Reserve Bank of India (RBI) is looking into the potential of creating a digital version of the rupee, known as eRupee, to improve international transactions and elevate India’s global financial standing. 

The RBI is also working on ways to encourage foreign direct investments (FDIs) in India’s growing fintech sector, with the eRupee playing a crucial role in this endeavour. 

This digital currency has the potential to revolutionise cross-border transactions and enhance India’s position in the global financial landscape, according to the RBI’s latest report on currency and finance. The rupee is currently in its advanced trial phase.

The report emphasises the eRupee’s importance in boosting India’s influence through non-military means. 

It suggests that policies related to digital trade and digitalisation, as well as efforts to promote the use of the Indian Rupee (INR) and the Central Bank Digital Currency (CBDC) project, will play a critical role in taking advantage of new opportunities, facilitating international transactions, reducing foreign exchange risks, and managing global liquidity.

Using the eRupee in this plan, the RBI is looking at ways to make it easier for foreign investors to invest in India’s growing fintech industry. 

RBI thinks that bringing the CBDC into the financial system will make data more secure, increase the availability of e-payment services, and help people in India improve their digital skills.

As of May 2024, India was one of 36 countries trying their CBDCs. CBDCs, like the eRupee, are digital versions of money made and controlled by central banks. CBDCs use blockchain tech, which makes transactions transparent, safe, and fast. This could mean we rely less on cash and change how we do money business.

The report said that by June 2024, 5 million users and 4,20,000 sellers were in the CBDC retail trial. The eRupee is being tested for smaller and larger payments between people and from people to sellers.

What’s eRupee?

eRupee is like digital Indian rupees, just like cash in your pocket or money in the bank. But it’s not on paper or in a bank computer—it’s on the blockchain, a safe digital ledger.

Below are the features of eRupee:

1) Issued by the RBI: The eRupee is a central bank’s digital money, made and managed by the Reserve Bank of India, just like normal money.

2) Digital Money: You can use digital money for business without a bank account.

3) Uses Blockchain: Blockchain tech is used for safe, clear, and traceable payments.

4) Still Testing: Testing is taking place in India for normal payments and government help programs.

5) eRupee is like having digital money watched over by India’s government—it offers a new way to pay in digital time.

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