Central Bank Digital Currency (CBDC) is a digital form of money that is issued by a central bank. The key motivations for issuing CBDC vary from country to country, but some of the benefits may include making transactions faster and easier, and reducing the need for physical currency. This paper explains the benefits and risks of issuing a digital currency, called e₹ (digital Rupee), in India. The e₹ (digital Rupee) will provide an additional option to the currently available forms of money. It is substantially not different from regular banknotes, but being digital it is likely to be faster, easier and cheaper to use. It also has all the benefits of other forms of digital money. This note is about the planned features of the digital Rupee, which is a new type of currency that will be used by the Reserve Bank. The Reserve Bank is trying to create a digital Rupee that is as close to a paper currency as possible, while also managing the process of introducing it in a seamless way. Some key considerations include choosing the right technology and design, deciding on possible uses for the digital Rupee, and issuing it in a way that is safe and secure. Additionally, the note discusses the implications of introducing a CBDC on the banking system, monetary policy, and the financial stability of the country.

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Keywords: CBDC, Banking System, Monetary Policy, Financial Stability, Digital currencies.