India’s digital currency transactions crossed 1 million per day last year with some support from large private and state-run banks.
Jan 05, India: Could the digital rupee be the next game changer in Bharat’s quest to be the global supper power in digital transactions?
The Central Bank digital currency (CBDC), also known as the e-rupee, registered one million daily transactions in December last year. CBDC serves as a digital alternative to physical cash and is developed using distributed-ledger technology, enabling peer-to-peer money transfers through mobile apps.
In December, Indian banks facilitated certain employee benefits through digital rupees, aiding the Reserve Bank of India in achieving its goal of one million daily transactions by the end of 2023.
The growth and acceptance of digital/mobile transactions, exemplified by Google Pay, PhonePe, and Paytm, which recorded a year-over-year growth rate of 58% in FY 2022-2023 compared to FY 2021-2022, demonstrates the shift embraced by common people towards the new era of transactions. UPI remains pivotal in this growth story, constituting over 75% of retail digital payments in India.
Similarly, digital rupee transactions will become successful when they are adopted by street vendors, daily wagers, and people on the street who will bring in the scale.
The RBI initiated its e-rupee pilot in December 2022, significantly expanding its use by integrating it with the popular Unified Payments Interface (UPI). This expansion fell short of its target with limited success.
However, sources revealed that last month, several major private and state-run lenders distributed employee benefits scheme amounts directly into CBDC wallets rather than salary accounts, as reported by Reuters.
These lenders reportedly included HDFC Bank (HDBK.NS), Kotak Mahindra Bank (KTKM.NS), Axis Bank (AXBK.NS), Canara Bank (CNBK.NS), and IDFC First Bank (IDFB.NS). The user base grew from three million to four million in December. The RBI anticipates non-financial firms to follow suit, further augmenting transactions, as per the sources.
Globally, countries like China, France, and Ghana are in the pilot stages of their CBDC projects. Others, such as Nigeria, have introduced their digital currency but faced limited success despite offering incentives like discounts on auto-rickshaw rides.
Indian banks are also incentivizing e-rupee transactions, responding to a push from the RBI to bolster volumes, as previously reported by Reuters.
Source: Reuters
