Bank-Powered Surge: India's Digital Rupee Achieves One Million Transactions in a Single Day

The retail pilot of the Central Bank Digital Currency (CBDC) in India has experienced substantial progress, marked by the digital rupee achieving a significant milestone of surpassing one million transactions in a single day on December 27, 2023. This noteworthy achievement was officially recognized in a communication dated December 29 from Shaktikanta Das, the Governor of the Reserve Bank of India (RBI), to the bank's staff.

Das's letter underscored the successful attainment of the targeted milestone by the e-rupee (CBDC), signaling the triumph of the digital currency initiative. However, it is essential to acknowledge that the use of the term "day" suggests that this achievement may be an isolated incident rather than a regular daily occurrence. Although the RBI initially aimed to achieve one million transactions per day by the close of 2023, it remains uncertain whether this objective has been consistently met.

The retail CBDC pilot, operational in more than 15 cities and involving the active participation of over a dozen banks, was initiated on December 1, 2022. The primary objective of this pilot is to explore the potential of the digital rupee in day-to-day transactions. Notably, the RBI has not provided a concrete timeline for the comprehensive implementation of the retail CBDC.

India's existing cashless infrastructure, particularly the Unified Payments Interface (UPI), presents a challenge to the widespread adoption of the digital rupee. Despite the RBI's endeavors to amplify transaction volumes, the digital currency has encountered difficulty in achieving significant daily transaction numbers, maintaining an average of around 25,000.

To stimulate adoption, certain government-owned and private sector banks reportedly facilitated the deposit of salaries and benefits into CBDC wallets for their employees last month, according to Reuters.  Among the banks mentioned in reports are HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank, IDFC First Bank, and Union Bank of India, another report said 

In an effort to encourage CBDC wallet transactions, banks urged their staff to engage in digital currency transactions for all their financial activities and ensured a 100% staff registration on the digital rupee app. Some banks even initiated the practice of crediting allowances directly to CBDC wallets.

The report also stated, while this approach has received support from certain sectors within the banking industry, the All India Union Bank Employees Federation, a trade union representing bank employees, expressed dissatisfaction. They argued against the management's ability to compel employees to use the CBDC wallet.

In contrast, the All India Union Bank Employees Association, as represented by its General Secretary N. Shankar, adopted a more positive perspective. Shankar emphasized that encouraging CBDC transactions among staff members was a legitimate strategy to enhance overall wallet account transactions, aligning with the objectives of the RBI and the government.

The degree of collaboration between the RBI and banks in promoting such practices remains uncertain, as the RBI did not respond immediately to Bitsday's request for comment. The evolving landscape of CBDC adoption in India reflects both the opportunities and challenges associated with transitioning to digital currencies in a nation with a well-established cashless ecosystem.

Read More: Exploring Privacy in CBDC Payments: Insights from Central Bank Project