India's digital currency transactions top 1 mln/day in Dec -sources

IDBI Bank

04/01/2024 08:29

By Jaspreet Kalra
       MUMBAI, Jan 4 (Reuters) - Indian banks disbursed some
employee benefits through digital rupee in December, helping the
Reserve Bank of India meet its target of one million daily
transactions by end-2023, three sources directly familiar with
the development said.
    The central bank digital currency (CBDC), called the
e-rupee, has been devised as a digital alternative to physical
cash and has been built using distributed-ledger technology.
    The RBI started its e-rupee pilot in December 2022 but
transactions averaged only 25,000 a day by the end of October,
even though its use case was significantly broadened by linking
it to the popular United Payments Interface (UPI), a framework
that facilitates peer-to-peer money transfer via mobile apps.
    However, last month some large private and state-run lenders
disbursed amounts related to employee benefit schemes directly
to employees' CBDC wallets, instead of their salary accounts,
the first source familiar with the pilot said.
    These lenders included HDFC Bank  HDBK.NS , ICICI Bank
 ICBK.NS , Kotak Mahindra Bank  KTKM.NS  and IDBI Bank
 IDBI.NS , the second source said.
    The RBI expects non-financial firms to follow suit as well,
helping boost transactions further, the source added. 
    Even the user base has been steadily growing ... "to about 4
million users currently, up from 3 million in December," a third
executive familiar with the pilot said.
    The sources declined to be identified as they are not
authorised to speak to the media. The RBI did not immediately
respond to an email seeking comment.
    Globally, countries including China, France and Ghana are in
the pilot stages of their CBDC projects. Others like Nigeria
have rolled out their digital currency, but with limited success
despite offering rewards like discounts on auto-rickshaw rides.
    Indian banks too are offering incentives for e-rupee
transactions, following a nudge from the RBI to boost volumes,
Reuters had reported earlier.
    "Compensating employees using the CBDC is a good step,"
Sharat Chandra, co-founder of India Blockchain Forum said. Other
avenues such as toll tax collections can also be included to
further encourage adoption, he added.

 (Reporting by Jaspreet Kalra; Editing by Savio D'Souza)
 ((jaspreet.kalra@thomsonreuters.com; +91-8769636545;))