Digital Rupee Hits 1 Million Daily Transactions: Role of Indian Banks

• Digital Rupee Achieves One Million Transactions in a Day
• Encouragement to Use CBDC Over Fiat Currency
• CBDC Pilots in Progress
• Moves to Boost CBDC Transaction Volumes
• Banking Sector Encourages CBDC Adoption among Employees
• Differing Opinions Within the Banking Community
• Unclear Extent of Collaboration between RBI and Banks

Digital Rupee Achieves One Million Transactions in a Day

On December 27, 2023, the digital rupee, India's central bank digital currency (CBDC), achieved more than a million transactions in a day. This milestone was aided, at least in part, by retail banks and their employees. A letter dated December 29 from Reserve Bank of India (RBI) Governor Shaktikanta Das confirms that the e-rupee exceeded the milestone of 1 million transactions in a day on Dec. 27, 2023.

Encouragement to Use CBDC Over Fiat Currency

A separate correspondence from a bank participating in the e-rupee pilot encouraged its employees to deposit funds and benefits using the CBDC, rather than the existing fiat currency. The use of the term day suggests this milestone was a one-off achievement and not a daily occurrence. It was, however, the initial target to achieve a million transactions per day by the end of 2023. The daily transaction volume surpassing a million has not been confirmed.

CBDC Pilots in Progress

The RBI is currently conducting both retail and wholesale CBDC pilots. The retail CBDC pilot is ongoing in over 15 cities with participation from more than a dozen banks. Although the pilot was initiated on December 1, 2022, the RBI has not announced a timeline for launching a full-scale retail CBDC. Despite the wide adoption of the Unified Payments Interface (UPI) fueling a cashless movement, the digital rupee averages only around 25,000 transactions a day.

Moves to Boost CBDC Transaction Volumes

In an attempt to bolster transaction volumes, certain government-owned and private sector banks deposited employee salaries and benefits in their CBDC wallets, as reported by Reuters. These banks include HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank, and IDFC First Bank, among others, with Union Bank of India, a government entity, also being named.

Banking Sector Encourages CBDC Adoption among Employees

In an official communication to its employees, one of the banks encouraged staff members to transact using the digital currency, ensuring 100% staff registration on the digital rupee app. The management decided to kickstart this initiative by crediting the newspaper allowance directly to the CBDC wallet. The move, however, was met with displeasure by the All India Union Bank Employees Federation, a trade union for bank employees, arguing that it cannot be mandated for employees to use the wallet.

Differing Opinions Within the Banking Community

An interview with CoinDesk revealed a contrasting viewpoint from a representative of a different organisation, the All India Union Bank Employees Association. General Secretary N. Shankar stated that bank employees should adopt CBDC services if they are offered to customers, seeing no inconvenience in such a move. He added, The RBI and the government want to increase wallet account transactions. One way of increasing the transactions is habituating your own staff members' wallet accounts...There is nothing wrong in that.

Unclear Extent of Collaboration between RBI and Banks

The RBI and the banking sector have often worked together to encourage what they see as best practices. It is, however, unclear if banks have previously taken similar measures. The RBI did not immediately respond to a request for comment from CoinDesk.

Edited by Jonathan Stoker