Cross-border remittances using e-rupee to halve cost of such payments: Seth

"So, for cross-border payments, CBDC can be very effective to bring down cost further to the range of 2-3%," the Secretary said at the Ficci Annual Convention here

Central Bank Digital Currency (CBDC) or e-rupee can help halve the cost of cross-border remittances to 2-3 per cent, an official said on Friday.

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

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

Giving 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 cost further to the range of 2-3 per cent," the Secretary said at the Ficci Annual Convention here.

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

The e-rupee is in the form of a digital token that represents legal tender.

It is being issued in the same denominations as the paper currency and coins. It is being distributed through financial intermediaries, i.e., the banks.

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