With the use of central bank digital currency (CBDC) remaining low, the Reserve Bank of India (RBI) is now exploring cash transfer schemes by state governments as a means to promote the digital rupee.
To begin with, banks have started transferring funds using CBDC for the Odisha government’s Subhadra scheme. Discussions are underway with other state governments to use the digital currency for similar programmes.
CBDC can be held and transacted through e-rupee wallets provided by both banks and non-banks for person-to-person payments or person-to-merchant transactions.
“The Subhadra scheme was the first government programme to distribute funds using the digital rupee. Following the success in Odisha, discussions are underway to integrate the CBDC into government schemes in Rajasthan, Goa, and a few other states,” said a source.
These government schemes are helping banks scale operations quickly, even as the adoption of CBDC, or the e-rupee, for retail use grows at a slower pace.
“Government schemes help us achieve significant scale in CBDC transactions within a very short time. For example, the Subhadra scheme is expected to benefit nearly 10 million women. High transaction volumes are crucial for understanding user issues and addressing them,” said a senior bank official.
In a meeting last month, the RBI asked banks to explore new use cases for CBDC to enhance its popularity. According to officials, the RBI plans to announce the nationwide launch of the e-rupee only after evaluating its impact and conducting thorough trials. The apex bank wants to be fully confident in its design, robustness, and security before considering broader implementation.
Banks are now providing certain allowances to their employees in digital currency. “We are encouraging our employees to use digital currency in office canteens and credit some allowances directly to their CBDC wallets,” said a senior official from a private bank.
Banks are also in discussions with public sector companies to explore ways to introduce CBDC.
At present, 15 banks, including SBI, HDFC Bank, ICICI Bank, Bank of Baroda, Kotak Mahindra Bank, Axis Bank, and Punjab National Bank, offer CBDC wallets.