RBI to expand e-Rupee's retail access beyond banks

RBI e-rupee expansion: The Reserve Bank of India (RBI) is set to broaden the accessibility of the e-rupee to retail users through non-bank payment system operators, including third-party payment app providers, the central bank announced on Friday.

Initially piloted in 2023, the central bank digital currency (CBDC), leveraging distributed-ledger technology, was restricted to transactions facilitated solely by banks, resulting in subdued transaction volumes. In response, the RBI is proposing that non-bank payment system operators, such as PhonePe, Google Pay, and Paytm, extend the offering of the e-rupee through CBDC wallets.

"This initiative aims to enhance access and expand choices available to users, while also assessing the resilience of the CBDC platform in handling multi-channel transactions," stated the RBI in its Statement on Developmental and Regulatory Policies.

The central bank will implement necessary changes to the system to facilitate this expansion.

According to a source familiar with the pilot, the RBI's decision aims to bolster transaction volumes for the retail CBDC. However, the process is still in its nascent stages, and third-party apps will need to obtain RBI approval to offer CBDC wallets.

Currently, the e-rupee boasts 4.6 million retail users and 400,000 merchants, as revealed by RBI Deputy Governor T. Rabi Sankar in a post-policy press conference.

In efforts to augment e-rupee transactions, the RBI introduced new features and widened its usage, including integration with Unified Payment Interface (UPI), India's renowned real-time payments system, and introducing programmability to enable targeted cash transfers, such as those to farmers.

These expanded use cases have contributed to the uptick in transactions, Sankar noted.

Notably, Indian banks facilitated the disbursement of certain employee benefits through the e-rupee in December, assisting the RBI in achieving its target of one million daily transactions by the end of 2023, as reported by Reuters in January.

(With Reuters inputs.)