The Reserve Bank of India (RBI) has announced a new milestone for its central bank digital currency (CBDC), confirming that the digital rupee has surpassed 1 million daily transactions.
RBI Governor Shaktikanta Das disclosed the milestone in an end-of-the-year letter to the bank’s staff, praising their resilience in the face of mounting challenges. The letter states that the RBI achieved the milestone of 1 million in its retail CBDC pilot just four days before the end of the year.
“We also made significant strides in usage of the e-rupee (CBDC) and exceeded the milestone of 1 million transactions in a day on December 27, 2023,” wrote Das.
In mid-2023, the RBI unveiled a target to process 1 million daily transactions with the digital rupee before the end of the year. At the time, average daily transactions hovered around 25,000, with several critics describing the target as a tall order for the RBI despite the frenetic pace of development.
Six months after the launch of the retail pilot, the RBI had onboarded over 500,000 residents but claimed to pursue a slow-and-steady approach in its CBDC development.
To attain the 1 million daily transaction threshold, the RBI appeared to move away from its cautious approach to achieve its target—it approved linking the digital rupee with India’s Unified Payments Interface (UPI), a move designed to improve the digital rupee’s interoperability and onboard new users.
There is wide industry speculation that the RBI may have tapped commercial banks to boost CBDC transactions via the introduction of incentives. Large lenders like HDFC Bank (NASDAQ: HDB) and ICICI (NASDAQ: IBN) announced customer reward points on every digital rupee transaction, redeemable for mobile recharge and highway toll payments.
Meanwhile, participating banks like Yes Bank and UnionBank announced time-bound
incentives in addition to their existing UPI integrations. Analysts argue that the last-minute push by the commercial banks played a decisive role in meeting the RBI’s target, but there are lingering fears of banks shuttering the initiatives.
One commercial bank executive notes that the success of the incentives could see the RBI reach formal arrangements with the lenders to extend the incentives into 2024.
Worrying tactics
Before the end of 2023, India’s central bank staff expressed their displeasure over plans by their employer to make payments of benefits to CBDC wallets rather than salary accounts. The RBI disclosed an internal memo urging employees to create digital rupee mobile app accounts in anticipation of payments.
However, the All India Union Bank Employees Federation protested against the RBI’s move, warning that plans to boost adoption should not coerce staff against their will.
“Your desire for 100% staff registrations on Digital Rupee App for using Central Bank Digital Currency (CBDC) should be limited within advice and encouragement and cannot lead to compelling the employees for doing so,” read their letter.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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Source: https://coingeek.com/india-cbdc-pilot-hits-1-million-daily-transactions-amid-controversy/