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India’s Digital Rupee Hit 1 Million Daily Transactions in December: Report

Last updated:

January 4, 2024

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India’s digital rupee hit 1 million daily transactions in December, aligning with the Reserve Bank of India’s targeted goal for daily transactions by the end of 2023, Reuters reported.

The central bank digital currency (CBDC), known as the e-rupee, was introduced as a digital alternative to physical cash and was constructed using distributed ledger technology.

The RBI initiated the digital rupee pilot in December 2022. Despite an initial average of only 25,000 transactions per day by the end of October, the use case witnessed significant expansion when linked to the United Payments Interface (UPI), a popular framework facilitating peer-to-peer money transfers via mobile apps.

Bank Employees Paid in E-Rupee

As reported earlier, several prominent private and state-run banks, including HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank, and IDFC First Bank, reportedly disbursed employee benefits directly to CBDC wallets, diverging from the traditional salary account method. This strategic move is expected to prompt non-financial firms to follow suit, contributing to further transaction growth.

The user base for the digital rupee has steadily expanded, reaching approximately 4 million users at present, up from 3 million in December, according to a third executive familiar with the pilot.

While sources declined to be identified due to a lack of authorization to speak to the media, it was reported that the RBI is awaiting responses to an email seeking comments on this development.

Central Banks Across the World Move Forward with CBDC

Globally, countries such as China, France, and Ghana are in the pilot stages of their CBDC projects. Despite efforts, countries like Nigeria have faced limited success in rolling out their digital currencies, even with incentives such as discounts on auto-rickshaw rides.

Indian banks are also actively encouraging e-rupee transactions by offering incentives, following a directive from the RBI to boost transaction volumes. Sharat Chandra, co-founder of the India Blockchain Forum, commended the move, suggesting that compensating employees using CBDC is a positive step, and he recommended exploring other avenues such as toll tax collections to further encourage adoption.