Can you do Fixed Deposit with Digital Rupee issued by RBI? All you need to know

The Reserve Bank of India (RBI) rolled out the first pilot of the retail digital rupee (e₹-R) earlier this month. The pilot phase of the Indian digital currency commenced on 1 December across four cities, namely New Delhi, Mumbai, Bengaluru and Bhubaneswar. The first phase of the pilot project included lenders like the ICICI Bank, the State Bank of India (SBI), IDFC Bank, and YES Bank. At present, the RBI is testing the robustness of the whole process of digital rupee creation, distribution, and retail use in real time. The digital rupee is India’s very own digital currency, and the digital token represents legal tender. The Indian digital currency is going to be distributed via banks. As per the central bank, you can make transactions with the digital rupee via a digital wallet offered by the participating banks and stores on mobile phones/devices. It should be noted that the digital rupee won’t earn interest on its own like fixed deposits (FDs) in a savings account. Can one have a Fixed deposit with a digital rupee? You can earn interest on digital rupee deposited in the bank in the near future. As per the Centre, the digital token may be converted into other forms of money such as deposits with banks. On Tuesday, Pankaj Chaudhary, Minister of State for Finance, clarified about the digital rupee in a written reply to a query in the Rajya Sabha. The minister explained that the e₹-R “is being issued in the same denominations as the paper currency and coins”. He went on to add that both Person-to-Person (P2P) and Person-to-Merchant (P2M) transactions can be performed using the digital token. Chaudhary further said that the e₹-R provides features of physical cash such as safety, trust, and settlement finality. “As in the case of cash, it does not earn any interest and can be converted to other forms of money, like deposits with banks.” How is e₹-R different from UPI? With the help of e₹-R, people will be able to make digital transactions. Since Unified Payments Interface (UPI) is already being used for making transactions digitally, you might be wondering about the difference between the two. According to Archit Gupta, founder and CEO of ClearTax, the biggest difference between UPI and e₹-R is that e₹-R itself is a digital currency allowing digital transactions, while the UPI is a platform via which digital transactions happen. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.