State Bank of India has linked the digital currency of Reserve Bank of India (RBI) with UPI from today i.e. 4th September. This means that now SBI customers will also be able to transact digital currency (e₹) through UPI. For this, users will have to download 'e-Rupee by SBI' app.
Before SBI, 6 big banks of the country – Yes Bank, Axis Bank, HDFC, Canara Bank, Kotak Mahindra Bank and Bank of Baroda have implemented this service. The Central Bank Digital Currency (CBDC) program was launched by the RBI in December last year. SBI was among the banks involved in the pilot project of this programme.
E-Rupee is a digital form of paper currency, which is based on block-chain technology like crypto currency. Its value is also equal to the current currency. It is a legal tender of the government just like a 100, 200 or 500 rupee note, which no one can refuse to accept. e₹ can be kept in the mobile wallet only. There is no need for a bank account to keep it. These are of two types – CBDC Wholesale and CBDC Retail.
To transact through UPI, it is necessary to have money in the bank account. For this, you will either have to deposit the physical currency in the account yourself or get the money transferred to your bank account from somewhere. This means that someone will have to deposit physical currency in the account once only for this transfer to be possible. But in e-rupee, physical currency does not have to be deposited into the account even once.
Whereas, e-rupee transaction does not require a bank account. RBI transfers money (e₹) directly to digital wallet instead of physical currency. This means that instead of keeping notes in your pocket or leather wallet, you will be able to keep e-rupee in your wallet and do transactions. This digital wallet is issued by the bank.
It is important to note here that in other payment systems like Phone-pay, Paytm, Google-pay, bank settlement is required after the transaction, that is, your transaction on these platforms passes through at least one bank. While e₹ can be done directly by scanning the QR code like cash.
According to RBI, it costs Rs 15-17 to print a Rs 100 note in India. A currency note lasts for a maximum of four years. The Central Bank has to print new notes which cost crores of rupees. In the financial year 2021-22, RBI had printed 4.19 lakh additional notes. Whereas digital currency can be issued at a nominal cost.