Cross-border remittances using e-rupee to reduce similar payment costs: Economic Affairs Secretary

Central Bank Digital Currency (CBDC) or e-rupee can aid in halving the cost of cross-border remittances by 2-3 per cent, an official informed on Friday.

Economic Affairs Secretary in the Finance Ministry, Ajay Seth, said the CBDC can be used for trade, remittances, or any other cross-border payment.

"Presently cross-border payment is not a very efficient system as it is time consuming. At the same time, there is a cost factor," Seth said.

Sharing official data, he said remittances to India is around USD 100 billion annually and compared to the global level of 8-9 per cent, the cost in India is low at 5 per cent of each transaction value.

"So, for cross-border payments, CBDC can be very effective to bring down costs further to the range of 2-3 per cent," the Secretary said at the FICCI annual convention.

The introduction of CBDC occurred during the Union Budget 2022-23 by the Union Finance Minister Nirmala Sitharaman. 
The RBI began the pilot wholesale CBDC project on November 1 previous year, while the pilot on retail version was launched on December 1 last year. 

The e-rupee is in the form of a digital token that represents legal tender, and is issued in similar denominations as paper currency, and coins. The distribution of the same happens through financial intermediaries such as banks.

Users are able to transact with e-rupee through a digital wallet offered by the participating banks.