Mumbai: India’s experiment with retail digital rupee (e- r) is off to a slow start with few traders and limited volume, even as banks remain optimistic about the digital currency’s promise.
The Reserve Bank of India (RBI) has released the e-rupee value 2.43 crore for the retail segment and 115.92 crore for the wholesale segment as of January 20, according to data obtained by Mint under a Right to Information (RTI) query. The central bank launched the retail e-rupee on 1 December.
According to industry experts, the retail numbers of the central bank digital currency (CBDC) are few, given that it is used by a small group of people under the RBI’s pilot program. He said that despite its immense potential, more convincing is needed to customers as the Unified Payments Interface (UPI) already offers instant payments.
“Getting retail users on this platform is not easy as they are already accustomed to instant payment methods like Unified Payments Interface (UPI). “Yet they have little incentive to try yet another way to gain popularity,” said a bank executive on condition of anonymity.
E-Rupee is a digital token that represents legal tender issued in the same denominations as paper currency and coins. Furthermore, e-Rupee transactions do not require interbank settlement.
To be sure, the RBI’s stated position on CBDC adoption is that it wants to move it slowly. “We have our targets in terms of users, in terms of merchants and everyone else. We will see it gradually,” RBI Deputy Governor T. Rabi Shankar said at the post-policy press conference on February 8.
Kotak Mahindra Bank, one of the latest entrants to join the pilot, plans to sign up 2,500 offline merchants and 12,500 retail users in the next three-four months.
“We plan to roll out the CBDC adoption in a phased manner over the next three-four weeks in Delhi, Mumbai and Ahmedabad, on an invitation-only basis for a limited set of users,” said Deepak Sharma, president and chief digital officer. , Kotak Mahindra Bank.
A digital payments expert said it has immense potential once people understand its benefits. “Currently, it is invite only and only for a few banks. Once it expands its presence, people can start using it. Issues like anonymity will be paramount,” he said.
The expert quoted above said on condition of anonymity that so far, only one large merchant—Reliance Retail—has tied up with banks to accept the digital currency, and such players will join the ecosystem after Volume will increase. “If the RBI wants greater adoption, it needs to think about allowing the use of CBDCs without the need for internet access,” he added.
Deputy Governor Shankar said that the retail CBDC has over 50,000 users and over 5,000 merchants are part of the initiative. While eight banks are currently included, Shankar said the RBI plans to add five more and, over time, all major banks. “The total number of transactions, a few days ago, was around 770,000. I don’t have the exact exact amount, but these are small value transactions.”
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