Estimating the Impact of Digital Rupee/eINR on the UPI Apps in India

Abstract

A high-level inter-ministerial committee (IMC) was created in 2017 by the Department of Economic Affairs under the Ministry of Finance (MoF) to investigate the legal status and prevalence of cryptocurrencies in India. In its report, the IMC suggested using Distributed Ledger Technology (DLT) to create a digital version of traditional fiat money. The Ministry of Financial Services Department of Financial Services, the Ministry of Electronics and Information Technology (MeitY), and the Reserve Bank of India's (RBI) have all encouraged the establishment of a special committee to investigate the development of CBDC from a legal and technical perspective. Without any formal recognition of cryptocurrencies, RBI began making plans for CBDC development in the future. The Reserve Bank of India (RBI) opened a regulatory sandbox on December 16, 2020, with the goal of testing new cross-border payment technologies and collecting data on their benefits and drawbacks for the financial system. The Reserve Bank of India (RBI) has legal authority to create the "programmable digital rupee" (CBDC), drawing on its experience managing the Unified Payments Interface (UPI), the Immediate Payment Service (IMPS), and Real-time Gross Settlement (RTGS) for distribution and validation. This bill was proposed by the Indian government on January 29, 2021.