RBI Launches First Digital Rupee

Current Context: The Reserve Bank of India (RBI) launched the pilot project of the first digital rupee in India.

• Earlier, the Union Finance Minister, Nirmala Sitharaman, while presenting the Union Budget-2022 announced the rolling out of digital currency by the RBI.
• The RBI identified 9 banks for their participation in the launch of digital currency:

1. State Bank of India (SBI)
2. HDFC Bank
3. ICICI Bank
4. Bank of Baroda
5. Union Bank of India
6. Yes Bank
7. IDFC First Bank
8. Kotak Mahindra Bank
9. HSBC

• As per the RBI, the launch of digital currency will serve as an additional option to the currently available forms of money.
• It further said that the launch of the digital rupee was not to replace but to complement the available forms of money.
• Digital Rupee or Central Bank Digital Currency (CBDC) is an electronic form of money (e-Money) that is issued by a central bank (in India, the RBI).
• The CBDC is of two types:

1. Retail (CBDC-R)- available for common use
2. Wholesale (CBDC-W)- restricted use by financial institutions

• Merits of a digital currency:

1. Easier and faster transaction
2. Cannot be physically damaged
3. Secure and market efficient
4. Better government checks

Question:

Q.1 How many banks were identified by the RBI for the launch of the pilot of the digital rupee?
a. 7
b. 8
c. 9
d. 10