With the publication of its annual report, the Reserve Bank of India (RBI) gave an update on its digital rupee work, saying the results for the central bank digital currency (CBDC) pilots were satisfactory. So far, there is less than $1 million in circulation for the retail CBDC. It plans to expand the locations, the number of banks involved, and the use cases.
At the start of November 2022, it launched a wholesale CBDC pilot for government bond settlement, and at the end of that month, it unveiled a retail CBDC pilot.
The wholesale pilot still involves the same nine banks and use case, with the wholesale CBDC in circulation standing at a relatively modest INR 100.39 million ($1.2 million). The figure for retail CBDC is even smaller at INR 50.7 million ($600,000) at the end of March. According to a previous update in February, 50,000 consumers were involved in the pilot.
The consumer-focused eRupee pilot is ramping up considerably. It started with four banks, which expanded to eight, and another five banks are in the process of joining. Regarding geography, the first locations were Mumbai, New Delhi, Bengaluru and Bhubaneswar, with another ten regions currently being added.
An un-named former RBI Governor told the India Express that he did not see the eRupee as a game-changer given India already has its UPI faster payment system. He believes emerging markets are interested in CBDC out of fear of cryptocurrency alternatives. But also a desire to reduce the cost of printing currency.
“For people who have already shifted to UPI-based payments such as phonepe or paytm, for example, I don’t believe the arrival of the eRupee will in any way change the user experience,” he said.
Meanwhile, in March the central bank inked a deal with its counterpart in the UAE to collaborate on experiments for cross border CBDC. These will target remittances and trade, with the UAE being home to many Indian migrant workers.
