MUMBAI – In a significant development, sources report that digital currency transactions in India surpassed 1 million per day in December, driven by banks disbursing employee benefits through the digital rupee. This initiative played a pivotal role in aiding the Reserve Bank of India (RBI) in meeting its target of one million daily transactions by the end of 2023, according to three sources intimately acquainted with the matter.
The central bank’s digital currency, known as the e-rupee, serves as a digital alternative to physical cash and is built on distributed-ledger technology. Although the RBI commenced its e-rupee pilot in December 2022, daily transactions initially averaged around 25,000 by the end of October. The integration with the United Payments Interface (UPI), a platform facilitating peer-to-peer money transfers via mobile apps, significantly broadened its use case.
Notably, last month, some major private and state-run lenders, including HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank, and IDFC First Bank, disbursed employee benefits directly to CBDC wallets instead of traditional salary accounts, according to the first source familiar with the pilot.
The RBI anticipates that non-financial firms will follow suit, further boosting transaction volumes, as stated by the second source. Concurrently, the user base has experienced steady growth, reaching approximately 4 million users, up from 3 million in December, according to a third executive familiar with the pilot.
While several countries globally are in the pilot stages of their Central Bank Digital Currency (CBDC) projects, India’s accomplishment stands out. The initiative also aligns with the global trend of incentivizing digital currency use, with Indian banks offering rewards to encourage e-rupee transactions, a move reported by Reuters earlier.
“Compensating employees using the CBDC is a good step,” remarked Sharat Chandra, co-founder of India Blockchain Forum, suggesting that expanding its application to areas like toll tax collections could further promote adoption. The sources, requesting anonymity as they are not authorized to speak to the media, revealed these insights, while the RBI has not yet responded to an email seeking comment.
