India’s public sector banks are witnessing a gradual increase in the use of the Central Bank Digital Currency (CBDC), commonly known as the e-rupee. In a significant step forward, these banks have also started processing Direct Benefit Transfers (DBT) through digital currency, according to sources.
SBI Expands CBDC Usage
State Bank of India (SBI), the country’s largest lender, has introduced the e-rupee facility to around 8 lakh customers and over 36,000 merchants. The bank is currently handling approximately 22,000 CBDC transactions daily, with a total value of ₹6 crore per day.
Additionally, SBI has begun using CBDC to transfer funds under government schemes. “We have started using CBDC for disbursing benefits to recipients under the Subhadra Yojana, a welfare scheme run by the Odisha government,” an SBI official said.
PNB Sees Growing CBDC Adoption
Punjab National Bank (PNB) has also made progress in CBDC adoption. Since the launch of the CBDC pilot in late 2022, the bank has onboarded 3.74 lakh retail users and recorded a total of 24.1 lakh transactions.
“With a strong customer base already using CBDC and ongoing promotional efforts, we expect significant growth in usage in the coming days,” said Ashok Chandra, MD and CEO of PNB.
RBI’s Efforts to Boost CBDC Transactions
The Reserve Bank of India (RBI) launched its pilot for wholesale CBDC in November 2022 and introduced retail CBDC in December 2022. As of June 2024, around 50 lakh users and 4.2 lakh merchants were participating in the retail pilot, according to RBI’s Currency and Finance report.
Despite this progress, the RBI’s target of achieving 1 million CBDC transactions daily remains a challenge. In response, RBI Deputy Governor T Rabi Sankar has urged banks to explore new use cases for CBDC and other digital financial products like the Unified Lending Interface (ULI).
“We need more innovation in digital payments. CBDC can be used as a cash substitute for micro-loan collections. We will soon engage with banks to generate ideas for expanding CBDC’s use,” Sankar said.
Fintech Firms Join the CBDC Push
To encourage broader adoption, the RBI has allowed major fintech companies like MobiKwik and Cred to introduce e-rupee wallets in collaboration with YES Bank.
Industry experts believe this move will improve CBDC adoption at the grassroots level, offering an alternative to Unified Payments Interface (UPI) transactions. “CBDC wallets may provide better financial incentives than UPI, making them attractive for peer-to-peer transactions like parents transferring money to children,” said Amit Das, CEO and co-founder of Algo360.in.
He further emphasized that fintech companies would play a key role in CBDC adoption by working closely with regulators to develop new use cases and build user trust.
While CBDC usage is still in its early stages, continued efforts from banks, fintech firms, and the RBI are expected to drive its growth and integration into India’s digital payment ecosystem.
