According to three sources, Indian banks are providing incentives for executing transactions with the e-rupee, the central bank’s digital currency, in an effort to increase volume.
According to them, the benefits are comparable to those provided by the banks on credit and debit cards and vary from cashbacks to reward points.
Since they were not authorised to speak with the media, the sources chose not to be identified. An email requesting comments received no response from the RBI.
A million transactions per day are what the RBI hopes to achieve by year’s end after launching a pilot program for the e-rupee in December. However, the first of the three individuals told Reuters that retail transactions are still falling short of the target, averaging about 25,000 per day, which is what prompted the central bank to intervene.
In an effort to draw users, the central bank has added new capabilities, such as tying the virtual currency to India’s well-liked real-time payments network, Unified Payment Interface (UPI), as Reuters revealed last month.
The largest private lender in India, HDFC Bank, has launched these initiatives to increase the volume of these kinds of deals, according to Parag Rao, the bank’s national head for payments, liability products, consumer finance, and marketing.
Rao did not specify which particular offers it is currently running.
According to the second of the three sources, smaller independent lenders Yes Bank and IDFC First Bank are providing reward points that may be redeemed for reservations for travel, smartphone recharges, and cashbacks through FastTag, a highway toll collection system.
According to two executives at the respective institutions, other banks, including ICICI Bank and Union Bank, are also anticipated to roll out such incentives.
According to an email answer from a bank representative, Yes Bank’s digital strategy includes these “time-bound promotional incentives” for the CBDC.
The other banks did not respond to emails.
According to the three sources mentioned earlier, the banks are financing the proposals on their own.
To encourage the use of their digital currency, nations like Nigeria around the world offer incentives like discounts on auto-rickshaw trips, albeit with varying degrees of success.
The majority of the incentives are “short-term measures,” according to a senior banker at a private lender, and they will help briefly increase volumes. However, this source continued, banks won’t continue to provide such incentives in the absence of a clear business plan.