Introduced by RBI in December 2022 as a digital alternative to physical cash, the e-rupee reached 1 million daily retail transactions by December 2023.
The digital currency introduced by the RBI, known as the e-rupee, has seen a decline in daily transactions, plummeting to just a tenth of its peak reached in December, reported news agency Reuters.
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The fall in the transactions of the e-rupee mirrors the challenges faced by several countries in gaining public acceptance of digital currencies.
Launched by the Reserve Bank of India (RBI) in December 2022 as a digital substitute for physical cash, the e-rupee successfully achieved a milestone of 1 million retail transactions per day by December 2023.
This milestone was reached following efforts by banks to encourage transactions through incentives for retail users and by using the e-rupee to disburse a portion of employees’ salaries.
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However, sources cited in the report that are directly involved in the pilot revealed that daily transaction volumes have now come down to approximately 100,000 transactions.
A banker involved in the project highlighted that this sharp decline indicates there is limited natural demand for the e-rupee among the public.
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The sources mentioned in the report said that ongoing transactions are primarily driven by banks using the e-rupee to distribute benefits to their employees. Towards the end of each month, transactions increase to around 250,000 to 300,000 per day due to these disbursements.
The RBI had set a target for banks to increase daily transactions to at least 1 million by late 2023 to test the scalability of the system. However, the efforts to boost transaction volumes have now ceased, according to one of the sources.
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Currently, the RBI does not have immediate plans to expand the pilot extensively. The focus remains on refining the technology and exploring potential use cases for the digital currency, according to the source.
“We expect adoption to grow as more use cases are developed,” said the source, the report quoted as saying.
Globally, a survey by the Bank of International Settlements found that a third of central banks are conducting pilots for central bank digital currencies (CBDCs).
Despite some launches, such as in the Caribbean nations of the Bahamas and Jamaica, the Federal Reserve Bank of Kansas City noted limited success, highlighting that CBDCs need to offer advantages over cash to drive public adoption.
