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Business News/ Economy / Retail digi rupee finds few takers
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Retail digi rupee finds few takers

India’s experiment with the retail digital rupee (e- ₹ R) is off to a slow start with few merchants and limited volumes, even as banks remain optimistic about the promise of a digital currency

RBI issued e- ₹ retail worth ₹2.43 crore till 20 January (Photo: iStock)Premium
RBI issued e- retail worth 2.43 crore till 20 January (Photo: iStock)

Mumbai: India’s experiment with the retail digital rupee (e- R) is off to a slow start with few merchants and limited volumes, even as banks remain optimistic about the promise of a digital currency.

The Reserve Bank of India (RBI) has issued e-rupees worth 2.43 crore for the retail segment and 115.92 crore for the wholesale segment till 20 January, according to data accessed by Mint under a Right to Information (RTI) query. The central bank launched the retail e-rupee on 1 December.

According to industry experts, retail numbers of the central bank digital currency (CBDC) are somewhat low, given that it is used by a small group of people under RBI’s pilot programme. Despite its immense potential, customers need more convincing since the unified payments interface (UPI) already offers quick payments, they said.

“It is not easy to get retail users on this platform because they are already used to quick payment methods like unified payments interface (UPI). They have little incentive to try another method that is yet to gain popularity," a bank executive said on the condition of anonymity.

The e-rupee is a digital token representing legal tender issued in the same denomination as paper currency and coins. Also, e-rupee transactions do not require interbank settlement.

To be sure, RBI’s stated position on CBDC adoption is that it wants to push it gradually. “We have our targets in terms of users, in terms of merchants and all that. We will go through it slowly," RBI deputy governor T. Rabi Sankar said at the post-policy press conference on 8 February.

Kotak Mahindra Bank, one of the latest entrants to join the pilot, is planning to sign up 2,500 offline merchants and 12,500 retail users in the next three-four months.

“We plan to scale up the adoption of CBDC in a phased manner in Delhi, Mumbai and Ahmedabad over the next three-four weeks on an invite-only basis to a limited set of users," said Deepak Sharma, president and chief digital officer, Kotak Mahindra Bank.

A digital payments expert said that once people understand the benefits, there is immense potential. “At present, it is invite-only and just among a few banks. Once it expands its presence, people might as well start using it. Issues like anonymity would be of paramount importance," he said.

The expert quoted above said on condition of anonymity that so far, just one large merchant–Reliance Retail– has tied up with banks to accept the digital currency, and volumes would grow once more such players join the ecosystem. “That said, if RBI wants more adoption, it would need to think of allowing usage of the CBDC without it requiring internet access," he added.

Deputy governor Sankar said that in retail CBDC, there are more than 50,000 users, and more than 5,000 merchants are part of the initiative. While eight banks are involved at the moment, Sankar said RBI plans to add another five banks and, over time, to all major banks. “The total number of transactions, a couple of days back, was roughly 770,000. I do not have the exact fixed amount, but these are small value transactions," he said.

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Shayan Ghosh
Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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Published: 20 Feb 2023, 12:04 AM IST
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