The Reserve Bank of India’s (RBI) eRupee or Central Bank Digital Currency (CBDC) is currently in an advanced trial phase with multiple national banks assisting the RBI in rolling out the digital currency. The use of eRupee in the retail sector has reportedly increased over the past year, according to RBI data. On the other hand, the use of eRupee in the wholesale sector has seen a significant decline. For now, the exact reason behind this observation remains unclear.
RBI has revealed details of eRupee CBDC circulation
An Economic Times report citing RBI data said that from FY2024, about Rs. 234 crore worth of eRupees were reportedly used. Around the same month last year, the figure stood at Rs. 6 crores In the wholesale sector, CBDCs worth Rs. 8 lakh has been utilized till March, which is significantly lower than last year’s expenditure of Rs. HRK 10.6 million.
CBDC is a digital representation of fiat currency, supported on blockchain networks instead of traditional servers. The digital currency has several elements reminiscent of cryptocurrencies such as fast transaction speed, enhanced privacy and maintenance of permanent transaction records. However, unlike cryptocurrencies, CBDCs are issued and regulated by central banks.
In a recent statement, the RBI said it plans to start circulation of the digital rupee through non-banking payment system operators. So far, CBDC distribution in India has relied entirely on banks. However, in the future, RBI is likely to allow platforms like Google Pay and PhonePe to distribute the digital rupee in the retail ecosystem.
RBI is working on offline payment for eRupee CBDC
The RBI also wants to add an offline payment feature to make it usable by those in areas with low internet connectivity.
Currently, Indians use the UPI payment method to process instant peer-to-peer transactions by simply scanning QR codes. The use of QR codes eliminated the need for merchants and customers to share their numbers with each other, benefiting privacy.
Meanwhile, the central bank is working to make the eRupee CBDC compatible with existing QR codes in India. This would open up opportunities for people to use eRupees without going through additional steps to access CBDC.
