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Indian banks have made strides in adopting digital currency by disbursing employee benefits through the digital rupee. These efforts have helped the Reserve Bank of India (RBI) achieve its target of one million daily transactions by the end of 2023.
Reuters noted that with the central bank digital currency (CBDC), known as the e-rupee, gaining momentum, it is set to revolutionize the country's financial landscape.
Advancing Digital Transactions
The RBI's e-rupee pilot, initiated in December 2022, initially saw only 25,000 daily transactions by the end of October. However, the pilot gained traction after being linked to the widely-used United Payments Interface (UPI), according to Gadgets 360. This framework enables peer-to-peer money transfers through mobile apps, significantly expanding the e-rupee's use cases.
Large private and state-run lenders have played a crucial role in successfully implementing the e-rupee. Banks such as HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank, and IDFC First Bank have disbursed employee benefit amounts directly to CBDC wallets rather than salary accounts. This shift aims to streamline transactions and promote the adoption of digital currency.
The RBI anticipates that non-financial firms will follow suit and embrace the e-rupee. This move would potentially enhance transaction volumes even further, significantly boosting the digital currency ecosystem. The growing user base, currently standing at around 4 million users, speaks to the increasing popularity and acceptance of the e-rupee.
Global CBDC Initiatives
India joins other nations, including China, France, and Ghana, in piloting their own CBDC projects. While some countries have rolled out their digital currencies, their success has been limited. Nigeria, for example, has faced challenges despite offering incentives such as discounts on auto-rickshaw rides. India's approach to incentivizing e-rupee transactions aims to avoid similar hurdles.
Indian banks have introduced various incentives to encourage e-rupee transactions, responding to the RBI's call for increased transaction volumes. These efforts have been received positively by stakeholders within the digital currency community. Sharat Chandra, co-founder of the India Blockchain Forum, applauds using CBDC to compensate employees and suggests expanding its application to include toll tax collections for broader adoption.
Photo: ICICI Bank Website
