RBI proposes amendment to law, wants digital currency included under definition of bank note

New Delhi, Nov 29: The government had said that it has received a proposal from the Reserve Bank of India to include digital currency under the definition of a bank note. The Central Bank Digital Currency was introduced by the RBI in October. The CBDCs which are digital or virtual currency are the digital version of rupees in India.

The Finance Ministry told the Lok Sabha that the introduction of the CBDC has the potential to provide significant benefits such as reduced dependancy on cash, higher higher seigniorage due to lower transaction costs, reduced settlement risk. This would lead to a more robust, efficient, trusted, regulated and legal tender based payment option, the ministry also said. The ministry however noted that there are also associated risks which need to be carefully evaluated against these potential benefits. The Centre also told the Lok Sabha that it has no proposal to recognise Bitcoin as a currency in the country. The RBI has raised concerns over cryptocurrencies posing macro economic and financial stability risks.

Prime Minister Narendra Modi had earlier this month chaired a high level meeting on cryptocurrencies with RBI officials, SEBI and the Finance Ministry.