After the launch of the central bank digital currency (CBDC), or e-rupee, on December 1, 2022, the value of retail digital rupee in circulation amounted to just Rs 5.70 crore involving 17.1 lakh pieces of notes (digital) as on March 31, 2023, the Reserve Bank said. When compared to this, the currency with public (physical notes) was Rs 33.66 lakh crore as on May 5, 2023, indicating that digital rupee is yet to make any impact in the country. There were around 0.50 lakh Rs 500 digital rupee pieces in circulation worth Rs 2.71 crore, the RBI said in its Annual Report. There were 0.60 lakh Rs 200 digital notes valued at Rs 1.16 crore and 0.80 lakh Rs 100 digital notes worth Rs 83 lakh in circulation, the central bank said. Rs 500 digital rupee accounts for 47.5 per cent of the total e-rupee in circulation, the RBI said in its Annual Report. The RBI has also launched the digital versions of 50 paise (Rs 0.50), Re one, Rs 2, Rs 5, Rs 10, Rs 20 and Rs 50 in a closed user group. It has even launched 2.7 lakh pieces of 50 paise digital rupee valued at Rs one lakh. On the other hand, the total value of wholesale digital rupee – used in the securities transactions – is just Rs 10.69 crore, showing that it has failed to make any impact in the segment. The retail CBDC launched by RBI is a digital token that will function as the digital equivalent of a banknote that can be transferred electronically from one holder to another. It can be kept in a wallet on a mobile phone, and spent as cash is spent. “The pilot in CBDC-Retail is proposed to be expanded to more locations and to include more participating banks,” the RBI report said. When asked whether digital rupee will be a gamechanger, a former RBI Governor told The Indian Express, “the short answer to your question is ‘no’. CBDCs are still largely uncharted territory. Only about a half dozen countries, all relatively small economies, have issued CBDCs so far. So, there is not much experience to fall back on. I find it curious that most advanced economies are still circumspect about CBDCs while emerging economies like India and China are moving forward briskly.” “Evidently, the motivations for them are different. I think emerging markets in particular are driven by fear and opportunity. Fear that in the absence of a CBDC, their monetary and financial stability will be threatened by some credible private cryptocurrency issued by a technology company such as Facebook, for example,” the former RBI chief said. “They also see an opportunity in CBDCs of reducing the cost of printing and distributing currency. The bottomline though is this. 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 e-rupee will in any way change the user experience,” he said. However, the RBI had indicated that it’s not in a hurry with its digital rupee plan. “We want the process to happen, but we want it to happen gradually and slowly. We are in no hurry to make something happen very quickly. We have our targets in terms of users and merchants, and we will go slowly,” RBI Deputy Governor T Rabi Sankar said in the RBI policy conference in February 2023. He had then said 50,000 users and over 5,000 merchants were using retail digital rupee for transactions. The pilot for the retail CBDC was launched in Mumbai, New Delhi, Bengaluru and Bhubaneswar, comprising participating customers and merchants in a closed user group (CUG). Other locations including Ahmedabad, Chandigarh, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla are also being added to the pilot in phases. The pilot began with four banks (State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank) while four other banks (Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank) have joined subsequently. Five more banks (Punjab National Bank, Canara Bank, Federal Bank, Axis Bank and IndusInd Bank) are in the process of joining the pilot. The scope of pilot is being expanded gradually to include more banks, users and locations as needed, the RBI said. In China, which launched a digital currency a year ago, the main problem facing the digital renminbi domestically lies in encouraging its use in the first place. On paper there are over 261 million e-CNY wallets, a substantial increase in number of users. However, a closer inspection reveals that most of these wallets are practically empty and most likely not in active use, with the average balance for individual wallets being RMB 3 (less than $0.50), according to a report by Centre for Strategic and International Studies (CSIS).
