RBI Wants Digital Currency Included Under Definition Of 'Bank Note', Proposes Amendment To Law

New Delhi: The government on Monday said that it has received a proposal from the Reserve Bank of India (RBI) to include digital currency under the definition of a 'bank note'. In October, the RBI had introduced the proposal of Central Bank Digital Currency (CBDC).

CBDCs -- digital or virtual currency -- are basically the digital version of fiat currencies, for instance, rupee in India.

The Ministry of Finance, in a written reply in Lok Sabha, stated, "Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, reduced settlement risk."

It would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option, the Ministry added.

However, the Ministry noted that the "there are also associated risks which need to be carefully evaluated against the potential benefits."

NDTV had reported in February this year that the RBI wanted a digital currency which was part of the Cabinet note on cryptocurrency.

In another reply, the Centre stated that it "has no proposal to recognise Bitcoin as a currency in the country."

The price of major cryptocurrencies in the country has seen massive fluctuations as investors await greater regulatory clarity.

Earlier this month, Prime Minister Narendra Modi had chaired a high-level meeting on cryptocurrencies with officials from the RBI, Finance Ministry, and the Securities and Exchange Board of India (SEBI).

Meanwhile, the RBI has repeatedly raised concerns over cryptocurrencies posing macro-economic and financial stability risks.