People should have no ‘fear psychosis’ over privacy concerns and transactions through the newly-introduced central bank digital currency (CBDC) do not leave any trail with a bank, RBI Governor Shaktikanta Das said today.

Replying to a query on possible raids by agencies like the Enforcement Directorate in the future because the CBDC does not possess the anonymity which the paper currency offers, Das said one must not be worried over privacy concerns. 

"Let's be clear, when you pay in currency notes to another person...here also incidentally, let me say, you cannot find out because the information is not available to the bank. The bank does not know," Shaktikanta Das said at the post-policy press meet today.

"It (CBDC) goes from my mobile to somebody else's mobile. So why should we create this fear psychosis?," he asked.

"The Income Tax department has certain limits for cash payments... (for) withdrawals beyond a certain limit, you have to give your PAN card number. The same rules will apply in the case of CBDC also because both are currency," he noted.

Acknowledging the concerns on piracy, RBI Deputy Governor T Rabi Sankar said the central bank is looking at technology and legal provisions to ensure that CBDC transactions are anonymous. The CBDC should be at par with paper currency when it comes to having the key feature of anonymity which has ensured that cash is still used in the developed world, he stated.

"How anonymity is to be ensured in the case of a digital currency, because the normal understanding is that anything digital leaves a footprint, can have various solutions," T Rabi Sankar said. The RBI is looking at a technological solution and also a legal solution to help assuage the concerns on this problem, he added. 

Elaborating on the difference between e-rupee and the Unified Payments Interface (UPI), Sankar said anonymity is a basic feature of currency. E-rupee, he said, is money, UPI is a payment method. 

“The fundamental feature of currency and cash is anonymity. One of the reasons it is still being used in many developed countries, to large extent, is because people love their privacy. How anonymity is to be ensured in the case of a digital currency, because the normal understanding is that anything digital leaves a footprint, can have various solutions," said Sankar.