E-rupee adoption soars amid expanded access

The e-rupee, India’s Central Bank Digital Currency (CBDC), has seen significant growth, with ₹234.12 crore in circulation by March 2024, mostly in retail. Retail users increased to 5 million, driven by banks promoting CBDC wallets and expanded interoperability with UPI. The RBI has also allowed non-bank payment system operators to offer wallets, boosting adoption.

The Central Bank Digital Currency (CBDC), or e-rupee, has been steadily gaining popularity among retail users as the Reserve Bank of India (RBI) expands participation. By March 2024, ₹234.12 crore worth of e-rupee was in circulation, compared to ₹16.3 crore a year earlier, as per RBI data. “The multi-fold jump could be due to a few big banks pushing CBDC wallets among their employees,” noted a senior banker. Additionally, the rise in CBDC transactions is attributed to the regulator permitting interoperability between CBDC and the Unified Payments Interface (UPI).

Almost all the CBDC in circulation was in the retail segment, with wholesale transactions dropping sharply. Of the total e-rupee circulation, ₹234.04 crore was retail, while wholesale transactions amounted to just ₹8 lakh. This surge in retail transactions is partly due to the RBI enabling non-bank payment system operators to offer CBDC wallets, thus expanding the user base. In the April monetary policy, the RBI governor stated: “The CBDC pilots are currently operating with increasing use-cases and participating banks. It is proposed to make CBDC-Retail accessible to a broader segment of users by enabling non-bank payment system operators to offer CBDC wallets. This will also facilitate testing of the resiliency of the CBDC platform to handle multi-channel transactions.”

CBDC is an electronic form of currency issued by the central bank and appears as a liability on its balance sheet. Retail users of the e-rupee surged to 5 million by June 2024 from 1.3 million a year earlier, with 420,000 merchants participating in the retail pilot. Initial use cases included person-to-person (P2P) and person-to-merchant (P2M) transactions, with ₹500 CBDC notes having the highest circulation at ₹1,643 crore, followed by ₹200 and ₹100 notes.