What is Digital Rupee? Digital Ruppe vs UPI Explained

The Digital Rupee, also known as the eRupee, is a form of digital currency that is issued and controlled by the Reserve Bank of India (RBI), which is the central bank of the country.

In this article, we will discuss the digital rupee and how it works. We will also explore the various advantages of digital rupee.

What is a Digital Rupee?

The e-Rupee is a kind of digital token that serves as legal tender money, according to the Reserve Bank of India. In contrast to cryptocurrencies, the digital Rupee is issued in the same denominations as coins and paper money, making it interchangeable 1:1 with the fiat currency.

The e-R, which will be made available on December 1st, is a digital token that stands in for money. It will be disbursed through middlemen, in this case, banks, and issued in the same denominations as coins and paper money.

Like consumers do with Paytm or Google Pay, payments to merchants may be done using QR codes displayed at merchant locations. “The e-R would provide characteristics of actual money, such as trust, safety, and settlement finality. It will not earn interest, just like cash, and may be changed into other kinds of payment including bank deposits, according to the RBI.

In four cities, including Mumbai, New Delhi, Bengaluru, and Bhubaneswar, the pilot will begin in four banks, including the State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank.

How does Digital Rupee Work?

The e-R would take the shape of a digital token that stands in for money. It will be disseminated through middlemen, i.e., banks, and printed in the same denominations as coins and paper money.

According to the RBI, users will be able to conduct transactions with e-R using a digital wallet provided by the participating banks and kept on mobile phones and other devices.

Both person-to-person (P2P) and person-to-merchant transactions are possible (P2M). QR codes that are displayed at the business location can be used to make payments to the merchant.

What is the advantage of using the Digital Rupee?

The RBI had previously stated that among other things, the reduction of operational costs associated with physical cash management, promoting financial inclusion, and bringing resilience, efficiency, and innovation to the payments system are the main reasons for considering the issuance of CBDC in India.

It will improve the settlement system’s efficiency, spur innovation in the area of cross-border payments, and give the general public access to applications that any private virtual currency may offer, without the dangers involved.

What are the Eligible Banks and Cities for Digital Rupee?

The introduction of the digital rupee will take place in phases, according to the central bank. The pilot would initially commence with four banks in only four locations for the first phase: State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank.

Mumbai, New Delhi, Bengaluru, and Bhubaneswar are among these cities. The pilot will now include four additional institutions, including Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank, according to the RBI.

what is digital rupee

Digital Rupee VS UPI

It is easy. UPI, in contrast to the digital rupee, just serves as an interface for financial transactions involving actual money. While one cannot withdraw the digital rupee from their bank account, it is only another type of money similar to fiat money. The UPI interface, however, enables consumers to conduct online transactions using their bank account. Money printing is essentially used for all transactions.

UPI and the digital Rupee are thus entirely separate ideas. With the introduction of the digital rupee, India may be hoping to eventually abandon UPI. The concept is likely to reduce the expense of keeping and delivering cash money by depending on the digital rupee.


The digital rupee, or e₹, is India’s central bank digital currency (CBDC). Launched in December 2022, it’s essentially a digital version of the physical rupee issued by the Reserve Bank of India (RBI). Think of it like having your rupees in a secure electronic wallet instead of carrying cash.

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