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Teji Mandi Explains: Will e-RUPI succeed in bringing rural households under fold of digital payment system?

07:58 PM Aug 02, 2021 | Teji Mandi

A strong section within India has rapidly emerged in the last few years, pushing for a cashless society. Over the last five years, digital payments have expanded at a 55% compound annual growth rate (CAGR). It puts India among the fastest-growing nations when it comes to adopting digital payment innovations.

In a recent interaction, RBI Deputy Governor T Rabi Sankar stressed that central banks across the globe are aware of the dangers of cryptocurrencies. Yet, they are upbeat about the potential of the concept of digital currencies. On the same lines, RBI is also putting unwavering attention on developing its own central bank digital currency (CBDC).

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e-RUPI: A New Digital Initiative

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While it is still a distant reality to see digital currency becoming a reality, India has taken one more step in that direction with the launch of e-RUPI. It is a cashless and voucher-like digital payment system. And expected to strengthen the digital payment infrastructure in India.

How does it work?

e-RUPI will work like pre-loaded, prepaid vouchers. The beneficiary would receive an SMS string or QR based code, which will be redeemable at designated centres. Since it is a pre-loaded, prepaid voucher, it can be encashed without debit cards, internet banking or any other electronic transfer instruments.

What's the Intention?

e-RUPI is expected to provide leak-proof delivery of welfare schemes and services to the beneficiaries. Once a beneficiary is identified, a voucher will be specifically generated and delivered to the said person on mobile phone for redemption.

The government intends to use this service for effective benefit transfer schemes like Mother and Child welfare schemes, Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertiliser subsidies etc. The private sector can also purchase these digital vouchers for their employee welfare and corporate social responsibility programmes.

Is it a digital currency?

As mentioned earlier, India is still far from seeing digital currency becoming a reality. However, steps like e-RUPI are crucial to bridge that gap. Digital payments are still at an infant stage in rural areas. It is a big impediment that digital currency is facing.

Linking the benefits of government schemes with e-RUPI will help in increasing the penetration of digital payment systems among rural households. It will increase the digital adaptation and further strengthen the infrastructure gap for the success of digital currency in future.

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