India’s public sector banks are seeing modest growth in volumes of central bank digital currency (CBDC) or e-rupee. They have also started extending direct benefit transfer (DBT) via the digital currency, sources say.
The country’s largest lender State Bank of India (SBI), for instance, has offered the e-rupee facility to its 8 lakh customers and over 36,000 merchants, sources say. The lender is registering about 22,000 CBDC transactions daily, with an average value of ₹6 crore per day. SBI did not respond to businessline queries till press time.
“We have also started using CBDC for transferring money to beneficiaries under the Subhadra Yojana, run by the government of Odisha,” a SBI source said.
Punjab National Bank (PNB), meanwhile, has 3.74 lakh CBDC users — mostly retail users — and has registered a total of 24.1 lakh transactions since the launch of the CBDC pilot in late 2022.
“With 3.74 lakh users already on CBDC, and since we are popularising it in a very big way, we expectgood traction in the coming days,” said Ashok Chandra, MD and CEO, PNB.
Scope for more growth
The RBI started a pilot for wholesale CBDC in November 2022 and for retail CBDC in December 2022. As of June 2024, 50 lakh users and 4.2 lakh merchants were participating in the retail pilot, according to RBI’s Currency and Finance report.
While banks have registered modest growth in CBDC volumes, the RBI’s initial target of achieving 1 million CBDC transactions daily remains a challenge. Addressing the issue, RBI Deputy Governor T Rabi Sankar last month called on lenders to come out with new use-cases for innovative products such as CBDC and Unified Lending Interface (ULI).
“I don’t think we have innovated enough on the collection side. Think about micro-loans where you are going out for collection — can the central bank digital currency (CBDC), which is a substitute for cash, be used as a collection mechanism? I can announce shortly we are going to engage with banks only to generate ideas for innovation,” he said.
Fintechs step in
In an effort to propel the growth of CBDC, the RBI recently allowed major payments companies MobiKwik and Cred to launch their respective e-rupee wallets in partnership with the RBI and YES Bank.
Experts say this move creates a new wallet offering with potentially better economics than UPI, and that fintechs can boost CBDC adoption at the ground level.
“As it expands, for MobiKwik as well as other players, it creates a new wallet offering with potentially better economics than UPI … It might be interesting for P2P use cases such as parents giving money to their kids as well,” said Amit Das, CEO and co-founder at Algo360.in.
“Like most financial services product adoption in India, this will be led by fintechs. Categories, usages, data-led insights, working with the regulator to expand the limits of what CBDC can be used for, driving transaction trust, and so on. At first though, fintechs are the only ones with the risk appetite to build a category,” he said.