India’s digital currency, the e-rupee, has seen a significant decline in usage, dropping to just one-tenth of its peak in December, Reuters reported, citing four sources.
The Reserve Bank of India initiated a pilot for the e-rupee in December 2022, positioning it as a digital substitute for physical currency. By December 2023, the pilot had achieved its target of 1 million retail transactions per day.
However, sources directly involved in the pilot project now report a sharp decline, with daily transactions plummeting to around 100,000.
The ongoing transactions are partly sustained by banks disbursing benefits to their employees via the e-rupee. Towards the end of each month, this practice has contributed to pushing daily transactions up to approximately 250,000 to 300,000, the sources said.
The central bank had asked banks to boost transactions to at least one million per day by late 2023 because it wanted to “test the system’s resilience at scale”. However, sources said, that the push has now halted.
Globally, among 86 central banks surveyed by the Bank of International Settlements, a third are running a pilot for a central bank digital currency (CBDC).
A little about e-Rupee
Digital Rupee, also known as eRupee, operates as a form of digital currency issued and controlled by the Reserve Bank of India (RBI), using blockchain or distributed ledger technology for secure and transparent transactions.
The RBI had announced the launch of the on December 1, 2022. Eight banks have been identified for phase-wise participation in this pilot. The first phase started with four banks — State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank — in four cities across the country.
Four more banks — Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank — joined subsequently.