Digital Rupees Investment in Fixed Deposit (FD)

The Reserve Bank of India (RBI) has introduced a sample of retail digital rupee for a specific group which includes certain merchants and customers. The digital rupee is just like an e-token which represents legal tender.

Updated On - 05 Sep 2025

RBI is actively testing the complete procedure of creating the digital rupee, its distribution and usage in retail sector on a real time basis. Once the testing phase is over, the customers will be able to use it to make transactions and payments. 

The Central Bank will distribute the digital rupee to all the banks across the country. As per the RBI, the users will be able to make payments by using e-wallets provided by banks and NBFCs.

Apart from this, the bank is still working to come up with other use cases for the digital rupee. However, the banks will not be providing any sort of interest in the digital rupee to the users. 

Why We Cannot Earn Interest on Digital Rupee? 

As mentioned above, digital rupee is an electronic form of cash which is issued by the bank in the same denominations as we have in the physical form. Just like we cannot earn interest on the physical cash we have in our wallet, the same is applied to the digital rupee. We cannot earn interest on the digital rupee that we have added in our wallet. 

Can We Do Fixed Deposit (FD) Using Digital Rupee? 

As of now there is no update by the bank of the creation of FD account using digital rupee. However, in future, you will definitely be able to create FD accounts by depositing your digital rupee in FD account. The government has also stated that the banks are anticipated to come up with different investment forms using digital rupee. It has many benefits like the users can make transaction on Person to Merchant (P2M) and Person to Person (P2P). 

Participating Banks in First Pilot 

Presently, there are eight participating banks in the first pilot namely the State Bank of India (SBI), IDFC First Bank, YES Bank, ICICI Bank, Bank of Baroda, HDFC Bank, Kotak Mahindra Bank, and Union Bank of India. 

FAQs on Digital Currencies

  • What is a digital currency issued by a Central Bank?

    A central bank digital currency (CBDC) is a digital currency issued and overseen by the central bank of a country. According to the International Monetary Fund (IMF), over a hundred countries are investigating CBDCs at some stage. However, as of 2022, only a few countries have CBDC or have firm plans to issue them. 

  • What are the different sorts of digital currency?

    Stablecoins, central bank digital currency (CBDCs), and cryptocurrency are the three primary types of digital currencies. 

  • How is digital rupees different from cryptocurrencies?

    According to RBI, Digital currencies, unlike cryptocurrencies, is not a commodity or claim on a commodity or digital asset. There is no one who issues cryptocurrency. They are not money (especially not currency) as the term has previously been understood. 

  • What is the most significant disadvantage of a digital money that might effect me?

    Digital currency systems are vulnerable to hacking. There is always the danger that hackers would bring down critical financial frameworks and undermine a country's economic basis. Centralized digital currency systems, such as those used by CBDCs, can allow for the tracing and tracking of users' information, jeopardizing their privacy. This may have an impact on the users. 

  • In India, how is digital currency used?

    Users will be able to transact with e-R using a digital wallet provided by partner banks and kept on their mobile phones or devices. Person to Person (P2P) and Person to Merchant (P2M) transactions are both possible. QR codes shown at merchant locations can be used to make payments to retailers. 

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