- Banks encouraged employees to use digital rupee wallets instead of normal bank accounts, helping digital rupee exceed 1 million transactions on December 27th, 2023
- This was a one-time milestone, not a daily occurrence yet; original target was 1 million transactions per day by end of 2023
- Adoption remains slow due to popularity of existing Unified Payments Interface (UPI); RBI trying to boost usage but no timeline yet for full digital rupee rollout
The digital rupee, India’s central bank digital currency, hit a major milestone recently, but not entirely organically.
Banks Encouraged Employees to Use Digital Rupee
On December 27th, 2023, the digital rupee exceeded 1 million transactions in a single day, according to a letter by Reserve Bank of India (RBI) Governor Shaktikanta Das. However, this surge was driven in part by retail banks depositing employee salaries and benefits into digital rupee wallets rather than into their normal bank accounts.
A letter from one participating bank showed that they had encouraged employees to use the digital currency instead of fiat currency. Banks like HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank, IDFC First Bank, and government-owned Union Bank of India were named as participating in this push.
One-Time Milestone, Not Yet Daily Occurrence
The use of “day” indicates this was a one-time milestone, not yet occurring daily. The original target had been 1 million transactions per day by end of 2023. It’s unclear if usage has hit 1 million transactions daily.
Overview of Digital Rupee Rollout
The RBI is running retail and wholesale CBDC pilots. The retail pilot is in over 15 cities with over a dozen banks. It began December 1st, 2022, but there is no timeline for full rollout.
India already has the popular Unified Payments Interface (UPI), so digital rupee volumes have lagged, averaging around 25,000 transactions daily. The RBI has tried to increase transaction volumes in recent months.
Bank Employees’ Reactions Mixed
Per reports, some bank employee groups have objected to being encouraged to use the digital rupee. However, the All India Union Bank Employees Association called the unhappy group a “minority” and saw no issue with banks offering digital rupee services to employees.
Conclusion
While boosted by banks’ actions, the brief surge over 1 million transactions shows the potential for the digital rupee. However, organic growth remains slow due to the popularity of UPI. The RBI will need to continue efforts to boost digital rupee adoption.
