Taking the first step towards having a digital currency in
the country, Prime Minister Narendra Modi will launch an electronic voucher
based digital payment system “e-RUPI” Monday. The platform, which has been
developed by the National Payments Corporation of India (NPCI), Department of
Financial Services, Ministry of Health and Family Welfare and the National
Health Authority, will be a person-specific and purpose-specific payments
system.
e-RUPI is a cashless and contactless digital payments
medium, which will be delivered to mobile phones of beneficiaries in form of an
SMS-string or a QR code. This will essentially be like a prepaid gift-voucher
that will be redeemable at specific accepting centres without any credit or
debit card, a mobile app or internet banking. e-RUPI will connect the sponsors
of the services with the beneficiaries and service providers in a digital
manner without any physical interface. The system has been built by NPCI on its
UPI platform, and has onboarded banks that will be the issuing entities. Any
corporate or government agency will have to approach the partner banks, which
are both private and public-sector lenders, with the details of specific
persons and the purpose for which payments have to be made. The beneficiaries
will be identified using their mobile number and a voucher allocated by a bank
to the service provider in the name of a given person would only be delivered
to that person.
According to the government, e-RUPI is expected to ensure a
leak-proof delivery of welfare services. It can also be used for delivering
services under schemes meant for providing drugs and nutritional support under
Mother and Child welfare schemes, TB eradication programmes, drugs &
diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya
Yojana, fertiliser subsidies etc. The government also said that even the
private sector can leverage these digital vouchers as part of their employee
welfare and corporate social responsibility programmes.
The government is already working on developing a central
bank digital currency and the launch of e-RUPI could potentially highlight the
gaps in digital payments infrastructure that will be necessary for the success
of the future digital currency. In effect, e-RUPI is still backed by the
existing Indian rupee as the underlying asset and specificity of its purpose
makes it different to a virtual currency and puts it closer to a voucher-based
payment system.
The Reserve Bank of India had recently said that it has been
working towards a phased implementation strategy for central bank digital
currency or CBDC digital currencies issued by a central bank that generally
take on a digital form of the nation’s existing fiat currency such as the
rupee. Speaking at a webinar on July 23, RBI deputy governor T Rabi Sankar said
that CBDCs “are desirable not just for the benefits they create in payments
systems, but also might be necessary to protect the general public in an
environment of volatile private VCs. While in the past, RBI governor
Shaktikanta Das had flagged concerns over cryptocurrencies, there seems to be a
change of mood now in favour of CBDCs on Mint Street. Although CBDCs are
conceptually similar to currency notes, the introduction of CBDC would involve
changes to the enabling legal framework since the current provisions are
primarily synced for currency in paper form.
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