On November 1st, 2022, the Reserve Bank Of India (RBI) launched the pilot for the Central Bank Digital Currency- CBDC, an e-RUPI digital payment platform, which is a mighty surge in establishing the new generation financial system and to fuel up the ongoing digital revolution in the country. But, is this a cryptocurrency? Will it work like UPI?

Well, CBDC is not a cryptocurrency or a payment system like UPI. Instead, the CBDC, or e-RUPI, is a digital token for retail consumers and merchants, which will represent legal tender issued by RBI and have the same denominations that your paper currency and coins currently have.

With e-RUPI, we can transact without any digital payment app, internet banking, or card. This move is going to be a major innovative leap over the way transactions in India are conducted. And it will put India in the race for countries to become the financial superpower. The e-RUPI digital platform will make access to money very easy, even for people who do not have a bank account or ATM.


What is e-RUPI?

On August 2nd, 2022, Prime Minister Narendra Modi proposed the digital payment platform e-RUPI Digital Platform. The e-RUPI is a cashless and contactless instrument issued by RBI that will enable digital payments without having any digital app, card, or bank account. A QR code or SMS string-based e-voucher will be sent to the beneficiary’s mobile phones. According to RBI, the e-RUPI will offer the same features like trust, safety, and settlement finality without earning any interest. The user can also convert e-RUPI into other forms of currency through banks.

Now the question is, with everything working seamlessly with our current system, why are we bothering with something that might take years to fit into? How is CBDC different from UPI? Well, the transactions we execute through UPI as a consumer seem very simple, but from a banking perspective, things are very complex at the backend.

For example, you buy a diet coke and pay 100 rupees through Google Pay. Your Google Pay wallet is linked to your bank account, so the 100 rupees will be debited and credited to the shopkeeper’s account. Here, the whole transaction looks very simple from the front, but guess what? At the backend, this 100 rupee has not been credited to the receiver’s account.

The way the system functions at the backend is very different. Instead of settling every single transaction in real-time, these banks settle the delta of the transaction periodically. For example, let’s say the HDFC bank’s customers sent rupees 200 crores to ICICI bank’s customers, and the ICICI bank’s customers sent 150 crores to HDFC’s customers. Instead of transferring every payment, banks wait till the end of the day, week, or month and then transfer the net amount to each other. In our case, the ICICI bank will send 50 crores to the HDFC bank (200 – 150 = 50). So as you see, although the ledger entry has happened immediately, the transaction takes a day or a week.

If this example is clear to you, you now have an idea of how complex the process is for banks. Now let’s come to the CBDC and how it will solve this complexity. When you buy a diet coke of 100 rupees through your account with the RBI, the money will go directly to the shopkeeper’s account with the RBI. Therefore, both frontend and backend transactions will happen immediately in real-time.

So like we do transactions through physical currency, now we can do the same as e-RUPI, but everything will take place in digital format.


Limit of e-RUPI Voucher Enhanced

The e-RUPI voucher was launched last year in August 2021 as a cashless payment product allowing users to redeem without any card, payment app, or bank account. Later this year, with the vision, to establish a robust financial system, the central bank of India-RBI decided to increase the limit of e-RUPI vouchers from rupees 10000 to rupees 100000. Moreover, to benefit the public, RBI allows multiple uses of a single voucher, which can be done till it exhausts.

The concept of e-RUPI has been introduced to strengthen the direct benefit transfer to the citizen by making it transparent. e-RUPI vouchers can be used by citizens who do not have smartphones, bank accounts, and internet access.


Key Highlights of e-RUPI Digital Payment

  • The central bank digital currency or e-RUPI is launched by the National Payment Corporation of India (NPCI), together with the Department of Financial Services (DFS), National Health Authority (NHA), Ministry of Health and Family Welfare (MoHFW), and other partner banks.
  • The e-RUPI is like a prepaid voucher which will ensure payments in real-time to the service providers without the involvement of intermediaries like commercial banks.
  • The e-RUPI will be circulated with the beneficiaries by organizations or the government through SMS or QR code.
  • General consumers can redeem their e-RUPI voucher without having any bank account, digital payment app, or card.
  • e-RUPI is contactless, secure, and economical. The details of the beneficiaries will be kept confidential.
  • The user will not be required to share personal details to redeem their e-RUPI vouchers.


Uses of the e-RUPI Digital Payment Platform

The e-RUPI digital payment platform is similar to a prepaid gift card, which will be accessed through SMS or a QR code. Users can use e-RUPI vouchers multiple times, and the payment will only be made after the completion of a transaction.

The e-RUPI digital payment platform can be enforced under various schemes which offer medical drugs and nutritional support, like Ayushman Bharat Yojana. In addition, the private sector can also leverage digital vouchers for their employee welfare and development programs.

The Payment Platform is of two types:

CBDC for wholesale: the CBDC was launched on November 1st, 2022, by RBI in four cities- Delhi, Mumbai, Bangalore, and Bhubaneswar for pilot testing. The wholesale e-RUPI differs from retail and is restricted to a few financial institutions. This system can transform the settlement of financial transactions undertaken by banks in the government securities segment. It will also help in bringing efficiency to inter-banking and international banking transactions.

CBDC for retail: the e-RUPI for retail is for the use of us all and will work as a legal tender issued by the RBI. Consumers, retailers, private players, non-financial consumers, and businesses can all use this type of e-RUPI.


Voucher Issuing Procedure

The National Payment Corporation of India built an e-RUPI digital payment system on UPI platforms. In addition, the National Payment organization boarded a few banking institutions to issue the e-RUPI vouchers’ authority to the user.

First, the company or government agency must contact a partner bank, including private and public sector lenders, with information about the specific person and the reason why the payment is needed.

Beneficiaries will be acknowledged by their unique mobile number voucher allocated by the bank.


About National Payment Corporation Of India

National Payment Corporation Of India (NPCI) is an umbrella organization, a non-profit body for all retail payments in India. It was set up with the support of the Reserve Bank of India (RBI) and the Indian Banks Association (IBA). NPCI works under the provision of the payment and settlement systems act 2017 with a hunch of establishing a strong payment and settlement infrastructure in India. It is also responsible for maintaining the infrastructure for the banking system in India for physical and electronic payment and settlement systems through modern technology.

The promoter banks of NPCI are the State bank of India, Punjab national bank, Bank of Baroda, Canara Bank, Union Bank of India, Bank of India, ICICI bank, HDFC bank, Citibank, and HSBC.

The main objectives of NPCI are to:

  • Promote electronic payments and settlements in India
  • Establish a robust infrastructure for facilitating electronic payments
  • Issue guidelines/standards for electronic payments in India
  • Implement new payment products and services in line with international best practices
  • Encourage innovation in the retail payments sector.
  • Facilitate interoperability between various systems deployed by banks / financial institutions for facilitating electronic payments in India.


Launching Of e-RUPI Digital Payment Platform

On August 2nd, 2021, Prime Minister Narendra Modi launched the revolutionary e-RUPI digital payment platform in a video conference, which will help to speed up the process of making and receiving payments. The Chief Executive Chairman of the National Health Authority joined him to offer details and insights into this groundbreaking new solution – emphasizing its potential impact on healthcare and financial sectors nationwide. To demonstrate how e-RUPI works, they then conducted an inaugural transaction at a private vaccination center in Mumbai, marking another step forward towards creating widespread access to cost-effective health services for all Indian citizens.

The launch of e-RUPI is a significant step forward for the country’s digital infrastructure and will help to boost the economy by making it easier for businesses to trade.


Objective Of e-RUPI Digital Payment

  • The main objective of the CBDC- e-RUPI is to provide a cashless and contactless payment system to all citizens of the country, including people living in remote areas where internet-based transactions are hard to execute.
  • To give more robustness to digital transactions and the Direct Benefit Transfer scheme.
  • Beneficiaries can also use the e-RUPI digital payment system to avail the benefits of subsidiaries and welfare schemes like Ayushman Bharat and Pradhan Mantri Jan Arogya Yojana.
  • To provide leakproof delivery of wellness services and benefits.
  • With the help of this digital platform, users can make safe and secure payment transactions.
  • It will ensure the timely payment of the services without any involvement of intermediaries.


List Of Banks That Are Life With e-RUPI

These are some of the banking institutions that are living with the e-RUPI digital payment system:

  1. Union Bank Of India
  2. State Bank Of India
  3. Punjab National Bank
  4. Kotak Mahindra Bank
  5. Indian Bank
  6. Indusind Bank
  7. ICICI Bank
  8. HDFC Bank
  9. Canara Bank
  10. Bank of Baroda
  11. Axis Bank


Features Of e-RUPI Digital Payment

  • This platform will be a cashless and contactless instrument.
  • This voucher will be delivered to the mobile of the users.
  • Users can redeem this voucher without any payment app, internet banking, or card.
  • The National Payment Corporation of India has developed an e-Rupi Digital Payment service on its UPI platform.
  • The Department of financial services, the Ministry of health and family welfare, and the national health authority are the partners in this initiative.
  • This payment platform is prepaid in nature.
  • e-RUPI does not require any service provider to make a payment.
  • This platform can also be used to provide services under schemes meant to provide drugs and nutritional support.
  • Through this platform, the payment to the service provider will be made after the completion of the transaction.


Benefits Of e-RUPI

  1. The e-RUPI digital payment system is a cashless and contactless payment system, which will help citizens where internet banking and access to physical currency are not as standard.
  2. Go cash-free and contactless regarding hospital payments – e-RUPI is a secure prepaid voucher! Make the payment process fast, easy, and hassle-free with an authorized verification code. Get ready for stress-free healthcare transactions that you can trust.
  3. e-RUPI vouchers are the perfect way to ensure your employees’ well-being without contact! Not only do they provide quick and secure access for recipients, but their digital nature also offers a cost reduction compared to physical issuers since no money is spent on physical issuance.



Other Services Provided By NPCI

Unified Payment Interface (UPI)

The unified payment interface (UPI)is arguably a revolutionary product by the NPCI in the fintech space. It is a system that enables multiple bank accounts of an individual into a single mobile application. It merges the feature of seamless transactions, merchants’ payments, and many other banking features under one roof.


Rupee and Payment (RuPay)

The Rupee and Payment or RuPay is a domestic payment network of India by NPCI. Like other countries that have Visa and Mastercard, we’ve RuPay cards that accept at ATMs and are also widely used for eCommerce transactions within the country.


Bharat Interface For Money (BHIM)

Bharat Interface for Money, also known as BHIM, is a mobile app that allows users to send and receive money using their smartphones. The app was launched by the Indian National Payment Corporation of India to promote digital payments in the country. BHIM is based on the Unified Payments Interface (UPI) platform and can be used with any UPI-enabled bank account. The app can be used to make payments at offline and online merchants and send and receive money from other BHIM users. In addition, the app also allows users to check their account balance and transaction history. Bharat Interface for Money is a quick and convenient way to make digital payments and is helping to promote a cashless society in India.


National Automated Clearing House (NACH)

National Automated Clearing House (NACH) is an electronic network for clearing repetitive and periodic transactions. Banks, credit unions use NACH, and businesses to process electronic payments, such as direct deposit and direct debit. NACH is also used to clear checks and other paper-based transactions.


Immediate Payment Service (IMPS)

Immediate payment services are a secure and economical method of interbank money transfer. Through IMPS, you can transfer money to banks across countries in real-time.


National Electronic Toll Collection (NETC)

National Electronic Toll Collection (NETC) is a system that allows drivers to pay tolls electronically. NETC systems use transponders to automatically deduct tolls from a prepaid account as vehicles pass through toll plazas. This eliminates the need for drivers to stop and pay cash, saving time and improving traffic flow.


BHIM Aadhaar

BHIM Aadhaar is an initiative by the National Payment Corporation of India to promote digital payments. It is based on the existing BHIM app and uses the Aadhaar platform for authentication. Under this scheme, users can link their Aadhaar number with their bank account and use it to make payments. The main benefit of BHIM Aadhaar is that it enables cashless transactions, which are convenient and secure. In addition, it helps to reduce transaction costs and promotes financial inclusion.


Aadhaar Enabled Payment System (AePS)

Aadhaar Enabled Payment System (AePS) is a payment system that uses Aadhaar, the 12-digit unique identity number issued by the Indian government, as a means of authentication. The system is designed to allow customers to use their Aadhaar number to make cashless payments at Aadhaar-enabled point-of-sale (POS) terminals. In addition, the Aadhaar Enabled Payment System is based on the interoperability of Aadhaar-enabled bank accounts, which enables customers to transact with any bank that is part of the network.


The system is also designed to work with micro ATMs and small, hand-held devices that can dispense cash and accept deposits. Aadhaar Enabled Payment System is intended to provide an alternative to cash payments, often made using paper currency.


National Financial Switch (NFS)

National Financial Switch is an interbank switching system in India that enables customers of one bank to use another bank’s ATM/debit card at ATMs and points of sale( PoS) locations. National Financial Switch is owned and operated by the National Payments Corporation of India (NPCI), an umbrella organization for all retail payments in India. The National Financial Switch currently has over 37 member banks and more than 50,000 ATMs connected to it. The National Financial Switch has been instrumental in increasing the reach and availability of ATM services in India.


Cheque Truncation System (CTS)

CTS is becoming increasingly popular among banks and businesses, and the National Payment Corporation of India is responsible for Managing this platform. Cheque Truncation System (CTS) is an electronic platform for processing cheques. It allows banks to scan and convert paper cheques into digital images that can be processed electronically. This system reduces the time it takes to clear a cheque and the risk of fraud and errors. In addition, CTS makes it easier for banks to keep track of their cheques and process them more efficiently.


Highlights Provided By The Chief Executive Chairman Of the National Health Authority

  • The chief executive chairman of the National Health Authority highlighted the fact that the e-RUPI digital payment platform is nothing less important than BHIM UPI.
  • Called CBDC is a person and purpose-centric instrument based on UPI’s architecture.
  • This platform is real-time and paperless. Health, nutrition, education, etc., departments will be able to take advantage of this platform. It can also be used for the national Digital Swasthya mission. The Reserve Bank of India recognizes this voucher.
  • Through this platform, direct fund transfers can be made to the service provider.


Highlights Provided By Honourable Prime Minister Narendra Modi

On the occasion of launching the e-RUPI platform, the honorable prime Minister of India has highlighted various benefits of this platform.

  1. He has highlighted that this initiative is a step towards digital governance.
  2. With the help of this platform, digital transactions can be made easily, and this platform will play a major role in making digital payments effective.
  3. This voucher will help in making transactions in a targeted, transparent, and leakage-free manner.
  4. The Prime Minister has also highlighted that India is moving ahead with the help of digital technology.
  5. The standard of living of citizens is improving, and technology is playing a major role in the lives of citizens of India.
  6. He has also expressed gratitude that this initiative is being launched when the nation celebrates Amrit Mahotsav on its 75th independence day.
  7. This voucher can not only be used by the government, but NGOs can also provide it in place of cash if they want to help someone in education, health, etc.
  8. This initiative will ensure that money provided to beneficiaries is used for the same purpose.
  9. In the initial phase of this scheme, only health sector benefits will be covered.
  10. The prime Minister has given various examples of using this voucher, like in vaccination drives, old age homes, hospitals, etc.
  11. This voucher is person and purpose-specific.
  12. Only the person for whom this voucher has been issued can use it.
  13. He has also highlighted the importance of technology.
  14. The banks and payment gateways have played a major role in launching this platform.
  15. Many private hospitals, corporates, businesses, NGOs, and other institutions have shown their interest in the e-RUPI platform.


View List Of Live Hospitals On e-RUPI

Follow these steps to view the list of live hospitals on e-RUPI:

  • Go to the official website of the National Payment Corporation of India
  • The Home Page will open on your screen
  • Click on the What We Do option on the Home Page
  • Now click on UPI
  • After that, you’ve to click on e-RUPI live partners
  • Then click on Live Hospitals on e-RUPI
  • A pdf will appear; in this file, you can view the list of live hospitals on e-RUPI


FAQs about e-RUPI

Is e-RUPI a digital currency?

Yes, e-RUPI is a digital currency regulated by the Reserve Bank of India. It offers the same features as the physical currency, like trust, safety, and settlement finality, without earning any interest. The user can also convert e-RUPI into other forms of currency through banks.


How will e-RUPI work?

e-RUPI has the same value as your currency papers and coins; it is just in the digital form. A QR code or SMS string-based e-voucher will be sent to the beneficiary’s mobile phones.

Does e-RUPI need a bank account?

No e-RUPI does not need any bank account, internet banking, debit/credit card, or digital payment app on smartphones. You only need a mobile phone (which could be any model) and a phone number linked to your Aadhaar Card.


What are the plans for a central bank digital currency (CBDC)?

The RBI plans for CBDC are laser-focused on establishing a next-generation financial system in the country, and e-RUPI digital currency is one of their bold moves. On November 1st, 2022, the central bank launched the pilot testing of e-RUPI for wholesale. A month later, on December 1st, 2022, they decided to launch e-RUPI for retail in four New cities: Delhi, Mumbai, Bangalore, and Bhubaneswar.


How is e-RUPI different from digital currency?

According to the RBI, the e-RUPI is different from other digital forms of money because any transactions done through e-RUPI are directly settled by RBI in real-time, unlike other forms of digital money, which commercial banks settle. Therefore, the CBDC is a liability of RBI, not of any commercial bank.


What are the types of e-RUPI?

The Reserve Bank of India officially launches two types of e-RUPI:

e-RUPI for wholesale: this type of CBDC is only for some, but it is for a few selected financial institutions and has different features from retail e-RUPI.

e-RUPI for retail: this type of CBDC is for everyone, retailers, merchants, and the general public to enable safe and easy money transactions.


Which banks are participating in the Pilot for the first pilot for the retail digital rupee?

These are some of the banking institutions participating as the first pilot for the retail digital rupee:

  • Union Bank Of India
  • State Bank Of India
  • Punjab National Bank
  • Kotak Mahindra Bank
  • Indian Bank
  • Indusind Bank
  • ICICI Bank
  • HDFC Bank
  • Canara Bank
  • Bank of Baroda
  • Axis Bank


Are there global examples of a voucher-based welfare system?

India is one of many to the idea of establishing a digital currency. Several other countries have successfully launched their voucher-based welfare system. Apart from the United States, this voucher system has been utilized by Chile, Hong Kong, Sweden, and many other nations.

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