Banks and financial institutions must aspire to conduct at least one million central bank digital currency (CBDC) or e-rupi transactions per day by the end of 2023, Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar said on Tuesday.
Saying that on a daily basis there are at least 310 million United Payments Interface (UPI) transactions being made, the one million e-rupi transactions per day target is not unachievable, he said. It will require all major banks to participate in the e-rupi ecosystem, he said. Currently, about 5,000 e-rupi retail transactions are taking place each day, the DG said during a press conference.
“One thing is that we wanted to have one million customers (of CBDC) by June. We already have 1.3 million customers; we have about 0.3 million merchants,”he said.
The DG said the focus is also on taking advantage of the UPI network to increase transactions in CBDCs. “Going forward, by the end of this month, we will have an arrangement. If the merchant has a CBDC account, then the money will settle in that account; otherwise, it will go through an UPI account and settle,” he said.
He said most of the 13 banks participating in CBDC pilots have implemented a partial interoperability system. Further, 20–25 banks should be on board with the CBDC and interoperability system, he said. “It might take some time. For the banks that have started this, it should be done by the end of this month.”
The DG stressed that cross-border payments are an important area where the CBDC advantage comes in. However, he said the global payment system is currently operated through the correspondent banking arrangement, which has some “inefficiencies”.
He said that in existing payment systems, there are only a few active entities, and hence the cost of transactions is high. Citing an IMF study, the DG said the cost of small-value remittance transactions is as high as 6% and needs to be changed.
State Bank of India (SBI) chairman Dinesh Khara, in his address, said the scope of e-rupi could be expanded in the wholesale sector by promoting the settlement of primary auctions of government securities. “We may include buy-side entities such as pension funds, trusts, NPS, EPFO, insurance companies, FII participants participating in the debt segment, and mutual funds that could also be roped into the ecosystem to use e-rupi,” Khara said.
