Indian banks are reportedly providing incentives to encourage the use of the e-rupee, India’s central bank digital currency, under the guidance of the Reserve Bank of India. These incentives encompass various benefits such as cash-backs and reward points, akin to those typically associated with credit and debit card transactions, according to unnamed sources familiar with the matter. The RBI initiated a pilot program for the e-rupee in December with the aim of achieving one million daily transactions by the end of the year. However, retail transactions have fallen short of this target, currently averaging around 25,000 per day. In response, the central bank is urging banks to enhance the adoption of the digital currency.
The central bank has also introduced new features, such as integrating the digital currency with India’s popular real-time payments system, the Unified Payment Interface (UPI), to attract more users. HDFC Bank, India’s largest private lender, has introduced incentives to expand the volume of e-rupee transactions, though the specific offers were not disclosed by Parag Rao, the country head for payments, liability products, consumer finance, and marketing at the bank. Smaller private banks, including Yes Bank and IDFC First Bank, are offering reward points that can be redeemed for various purposes, including travel bookings, mobile recharges, and cashbacks through the FastTag highway toll collection system, as per one of the sources. Additionally, it is expected that other banks like ICICI Bank and Union Bank will also roll out similar incentives, as indicated by executives at these institutions.
These incentives, described as “time-bound promotional incentives,” are part of Yes Bank’s digital strategy, according to a bank spokesperson. The banks themselves are financing these offers. Globally, some countries, like Nigeria, have offered incentives such as discounts on auto-rickshaw rides to promote the adoption of their digital currencies, although these efforts have seen limited success. It’s worth noting that these incentives are considered temporary measures aimed at temporarily boosting transaction volumes. Banks are unlikely to sustain such incentives unless a clear and viable business proposition emerges.
