RBI’s CBDC sees drop in wholesale circulation, huge surge in retail usage
The Reserve Bank of India’s (RBI) eRupee or central bank digital currency (CBDC) is currently in an advanced testing phase with several national banks assisting the RBI in rolling out the digital currency. According to data from the RBI, the usage of eRupee in the retail sector has increased over the past year. On the other hand, the usage of eRupee in the wholesale sector has seen a notable decline. The exact reason behind this observation is unclear at the moment.
eRupee CBDC circulation details revealed by RBI
An economic time report Citing RBI data, around Rs. 234 crore worth of eRupee was reportedly used in FY 2024. Around the same month last year, the figure was Rs. 6 crore. In the wholesale sector, CBDCs worth Rs. 8 lakh were used in March, which is significantly lower than last year’s outlay of Rs. 10.6 crore.
A CBDC is a digital representation of a fiat currency, supported on blockchain networks instead of traditional servers. The digital currency has several elements similar to cryptocurrencies, such as fast transaction speed, enhanced privacy, and the maintenance of permanent transaction records. However, unlike cryptocurrencies, CBDCs are issued and regulated by central banks.
In a recent announcement, the RBI said it plans to allow the digital rupee to circulate through payment system operators that are not part of the banking system. So far, CBDC distribution in India has been entirely dependent on banks. However, in the future, the RBI is likely to allow platforms like Google Pay and PhonePe to distribute the digital rupee in the retail ecosystem.
RBI working on offline payments for eRupee CBDC
The RBI also wants to add an offline payment feature so that the app can be used in areas with poor internet connectivity.
Currently, Indians are using UPI payment method to process instant peer-to-peer transactions by simply scanning QR codes. The use of QR codes has eliminated the need for merchants and customers to share their numbers with each other, making privacy a priority.
Meanwhile, the central bank is working on making the eRupee CBDC compatible with the already existing QR codes in India. This would open up options for people to use the eRupee without having to go through extra steps to access the CBDC.
