On December 1, 2022, the RBI launched the retail digital rupee pilot. The pilot will initially cover four cities—Mumbai, New Delhi, Bengaluru, and Bhubaneswar. Bhubaneswar must feel a little out of place on this list, just like IIM Lucknow among the trinity of ABC.
Customers can make payments to merchants using QR codes displayed at merchant locations. I received a WhatsApp forward in my finance group saying “Congrats Retail e-Rupi launched” along with an image showing a QR code. However, below it was a UPI ID as WhatsApp had scanned the UPI QR code instead from the same image. I have a feeling perhaps WhatsApp is asking the same question that a lot of people have been asking about the utility of e-Rupi over UPI like that meme “Bhai kehna kya chaahte ho?”
As per the November 29 guidelines, “As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks.” Those deposits in turn will also not earn anything because inflation will wipe away your real return leaving you poorer than you began before the pilot.
According to the RBI, the e-rupee is fully interchangeable with the fiat rupee. Therefore, all the jokes about the rupee plunging vs the dollar would equally apply to the e-rupi, making this columnist’s job a whole lot easier.
As per the guidelines, it would be token-based, i.e., similar to banknotes, which means whoever holds it is presumed to own it. e-Rupi is like the handkerchief with which you can block a seat on the bus or claim ownership of the Qutub Minar in a literal translation of that old joke.
In a token-based CBDC, the person receiving a token will verify that his ownership of the token is genuine. This genuineness is in stark contrast to the petrol bills submitted by corporate employees for travel re-imbursement where even the existence of the petrol pump itself is suspect. Perhaps we can have similar tokens for paternity disputes after that epic Bollywood dialogue “Kal raat humaare beech jo bhi hua”.
The e-Rupi will be issued in the same denominations as currency notes. Which means paanwallahs will continue to substitute your e-rupi change with e-mithai. To begin with, the participating banks will roll out the pilot for a closed user group comprising select retail customers and merchants. The participants for this closed user group will be selected based on their gotra.
On December 1, select users were picked to get a CBDC wallet with digitally printed notes and signatures by the RBI Governor. However, corporate finance teams say they will continue to demand hard copy of invoice from vendors even for payments in e-Rupi. They may also demand hard copy of the RBI governor for vendor registration.
The central bank has asked lenders to not report low-value transactions made via the digital rupee to provide some assurance of anonymity. It is suggested that housewives can hide the e-Rupi from their husbands similar to fiat currency by stashing it in that ancient trunk received from the maternal home during marriage explicitly for this purpose.
According to one banker, the transactions are not hitting your bank account because once you move the money to your wallet, they will not be reported. Salaried employees with EMIs are well aware of amounts that never hit their bank account but go straight to the finance company’s wallet.
However, another banker insisted that while the transactions will be anonymous, the e-Rupi will always be traceable. Because the central bank is working on anonymity but it’s hard to give up the Indian parent’s habit of asking “where are you going?” and “when will you return?” So before I sign off, I must ask any reader who is planning to leave this article without likes and shares: “where are you going?” and “when will you return?”
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