Indian banks offer incentives to lift digital currency transactions - sources

IDFC First Bank

27/10/2023 05:55

By Jaspreet Kalra
       MUMBAI, Oct 25 (Reuters) - Indian banks are offering
incentives for conducting transactions using the central bank
digital currency, the e-rupee, nudged by the Reserve Bank of
India to boost volumes, three sources said.
    The incentives range from cash-backs to reward points,
similar to those offered by the banks on credit and debit cards,
they said.
    The sources declined to be named as they were not authorised
to speak to the media. The RBI did not respond to an email
seeking comment.
       The RBI started a pilot program for the e-rupee in
December and is targeting a million transactions daily by
year-end. But retail transactions are still tracking below the
target, averaging around 25,000 a day, prompting the central
bank's push, the first of the three sources told Reuters. 
    The central bank also introduced new features, including
linking the digital currency to India's popular real-time
payments system, Unified Payment Interface (UPI), to attract
users, Reuters reported last month.
    HDFC Bank, India's largest private lender, has rolled out
such offers to expand the scale of such transactions, said Parag
Rao, country head for payments, liability products, consumer
finance and marketing at the bank. 
    Rao did not identify the specific offers it is running.
    Smaller private lenders Yes Bank and IDFC First Bank are
offering reward points that can be encashed for travel bookings,
mobile recharges and cashbacks via FastTag, a highway toll
collection system, according to the second of the three sources.
    Other banks, including ICICI Bank and Union Bank, are also
expected to roll out similar incentives, according to two
executives at the respective banks.
        Such "time-bound promotional incentives," for the CBDC
are part of Yes Bank's digital strategy, a spokesperson for the
bank said in an emailed response. 
  
        Emails sent to the other banks were not answered.
  
    The banks are funding the offers themselves, all three of
the sources cited earlier said.
        Globally, countries like Nigeria offer rewards like
discounts on auto-rickshaw rides to spur adoption of their
digital currency but with limited success. 
    The incentives are largely "short-term measures," that will
help drive volumes up temporarily, a senior banker at a private
lender said. Banks, however, won't keep offering such incentives
for long unless there is a clear business proposition, this
person added.

 (Reporting by Jaspreet Kalra; Editing by Dhanya Ann Thoppil)
 ((jaspreet.kalra@thomsonreuters.com; +91-8769636545;))