Indian banks have rolled out a series of incentives to encourage the use of the central bank digital currency, the e-rupee, under the encouragement of the Reserve Bank of India (RBI), according to three anonymous sources.
These incentives encompass a variety of benefits, such as cash-back rewards and loyalty points, akin to the perks provided to customers using credit and debit cards, the sources disclosed, requesting anonymity as they were not authorized to speak to the media.
The RBI initiated a pilot program for the e-rupee in December, with the goal of reaching a daily transaction volume of one million by the end of the year. However, the current retail transaction numbers are falling short of this target, averaging approximately 25,000 transactions daily. This has prompted the RBI’s push for these incentives, as revealed by one of the three sources to Reuters.
HDFC Bank, India’s largest private lender, has implemented these incentive offers to expand the scale of e-rupee transactions, as stated by Parag Rao, the Country Head for Payments, Liability Products, Consumer Finance, and Marketing at the bank. Rao did not specify the exact nature of the offers currently in effect.
Smaller private lenders, Yes Bank and IDFC First Bank, are offering reward points that can be redeemed for various benefits, such as travel bookings, mobile recharges, and cashbacks through the FastTag system, a highway toll collection system, according to the second of the three sources.
It is anticipated that other banks, including ICICI Bank and Union Bank, will introduce similar incentives, as noted by executives from these respective banks.
“Yes Bank’s digital strategy includes these ‘time-bound promotional incentives’ for the central bank digital currency,” stated a spokesperson for Yes Bank in response to an email inquiry. However, emails sent to the other banks remained unanswered.
All three sources confirmed that the banks themselves are funding these incentive programs. Notably, other countries, such as Nigeria, have also experimented with rewards, like discounts on auto-rickshaw rides, to promote the adoption of digital currency, albeit with limited success.
These incentives are primarily considered “short-term measures” that may boost transaction volumes temporarily, as explained by a senior banker at a private lender. However, the continuation of such incentives in the long term depends on the emergence of a clear and sustainable business proposition, the source added.
