INDIA’S DIGITAL CURRENCY
Showing support to the concept of digitalization, India’s Prime Minister, Narendra Modi is scheduled to launch the “e-Rupi” on August 2, 2021 via video conferencing.
The electronic voucher-based rupee has been developed by the National Payments of India in partnership with the Department of Financial Services, Ministry of Health & Family Welfare and National Health Authority. This digital rupee has been developed on the Unified Payments Interface (UPI) platform.
What is an E-Rupi?
An e-Rupi is a “cashless and contactless instrument for digital payment.” The digital payment is built on the UPI platform to enable seamless transfer of funds from one bank to another in real time.
This facility is limited to India as of now. It can be expanded to international payments in the future if the concept is well accepted by the general public.
The e-Rupi is designed to be a “person-to-purpose” specific digital payment method in India. The government of India has launched this facility so as to provide government schemes to the targeted people without any intermediary or corrupt middlemen. As clearly outlined by the phrase “person-to-purpose”, the Government of India designed this payment facility to impact more and more people and spread awareness about the benefits of digitalization. Moreover, the “purpose” refers to the aim of advancing India into a better economy and a developed country. The government has taken various steps, including the introduction of the E-Rupi facility.
How does an E-Rupi work?
The facility is a QR code or an SMS based e-voucher, which is transferred from the payer to the beneficiary’s UPI app or any compatible internet banking application. With the help of an E-Rupi, the user will be able to redeem the e-voucher without requiring any digital payments app or a banking facility.
The e-Rupi is transferred to the beneficiary’s account in real-time. That is, the voucher is sent almost instantaneously to the receiver without any physical interface.
Since the E-Rupi is built on the UPI interface, it requires its platform to transfer from one account to another. The current compatible banking UPI platforms include the State Bank of India, HDFC bank, Axis bank, Punjab National Bank, Bank of Baroda, Canara Bank, IndusInd Bank and lastly ICICI Bank.
Users can transfer the E-vouchers to any beneficiary having a UPI id under any of these banks. The Government may or may not add any other banks into this facility, it is solely at the developer’s discretion. Thus, if you want access to this facility, you must open an account under the aforementioned banks.
According to the National Health Authority, “the contactless e-RUPI is easy, safe and secure as it keeps the details of the beneficiaries completely confidential. The entire transaction process through this voucher is relatively faster and at the same time reliable, as the required amount is already stored in the voucher.”
What was India’s stance towards cryptocurrency?
India was earlier unsupportive of cryptocurrencies. There were rumors that the Indian government was planning to pass a law to ban cryptocurrencies. However, later it was clarified that the government would pass no such order. It also instructed banks to allow its clients to invest in cryptocurrencies, giving greater autonomy to crypto enthusiasts.
Moreover, it seems that Nirmala Sitharaman, the Finance Minister may pass a cryptocurrency bill in the coming parliament session. However, its certainty is still not confirmed as the government refused to comment on it.
What are the benefits of the E-Rupi?
The government’s project has several upsides to itself, the general people, institutions and hospitals.
Looking at the advantages for the government, the adoption of this facility will eradicate black money and tax evasion. Since this payment facility is digitalized, the transactions will be recorded in the official statements which are required to be filed with the income tax department. Moreover, the government will have full autonomy over the E-Rupi.
The government has kept the interests of the general public. The public will be able to transact with each other in a contactless manner. They need not carry physical copies of the voucher. Furthermore, the redemption of the voucher is quite convenient, being a two-step process. Finally, this facility is highly secure as the users are not required to share their personal details such as account number, IFSC code and other formalities to transact with one another.
Lastly, the e-Rupi is quite beneficial to institutions and corporations. Corporates can provide e-vouchers to their employees as incentives. The corporates can conduct high volume transactions with negligible costs and intermediary charges. Again, safe and secure payments also benefit the institutions.
The introduction of a centralized digital payment facility will pave a great way towards the advancement of the country.