'Programmed' eRupee is here to buy farm inputs

MUMBAI: RBI has allowed non-banks to issue wallets for the central bank digital currency, also known as eRupee. RBI has also launched "programmable CBDCs", which will be issued to farmers for restricted usage of buying farm inputs, a move which may pave the way for fertiliser subsidies to be routed through this mechanism.

For example, govt can send digital rupees to farmers to buy fertilisers. Once the farmer sends eRupee to the merchant, they will be on a par with cash. However, using CBDC for cross-border payments will require partnership with other central banks.

RBI deputy governor T Rabi Sankar said that 2.2 crore CBDC transactions have been performed by 46 lakh users and 4 lakh merchants so far. He also stated that banks were testing offline CBDCs in a closed group, and that they will be available to the public soon.

According to bankers, two unique features of CBDC that are not present in other digital payments like UPI are programmability and the ability to trade with other digital currencies. Programmability will enable the govt to send digital money to citizens and limit its usage to specific merchants. While its usage is limited to the original beneficiary, it becomes interoperable with currency once it is paid to the merchant.

As part of its development measures, RBI will develop an app that will allow individuals to invest in govt securities under the existing retail direct scheme. RBI also stated that customers can deposit funds in cash machines using UPI instead of debit cards.

At present, only banks are authorised to issue wallets for holding CBDCs, but allowing non-bank payment system operators is expected to significantly boost the usage of digital currency.