India's digital rupee fails to excite interest, bankers say

India's digital rupee fails to excite interest.

New Delhi: A month into India's pilot project for using an official digital rupee for inter-bank and institutional transactions, stakeholders are seeing no benefits, several bankers said. Seven bankers told Reuters that using the e-rupee of the Reserve Bank of India (RBI) was much the same as internet-based banking that users were already satisfied with. The RBI has devised the e-rupee basically as a digital alternative to cash - one using blockchain distributed-ledger technology, to some degree anonymous and most relevant to consumers and retailers. But in the initial trial banks have been using it for settlements with each other - with no particular advantage, according to bankers.

Indeed, the e-rupee, one of several central bank digital currencies (CBDCs) being tried around the world, had a drawback, they said: each trade using it had to be settled individually, whereas trades in the established interbank payment system were first netted off then settled in bulk with the clearing corporation.

"There is no advantage over internet-based transactions and the lack of netting is actually a big drawback," said an executive at a private bank that had used wholesale e-rupees in the pilot program.

Another issue is that, since e-rupee transactions do not wholly replace those using established procedures, they add to banks' accounting work.

"At the moment it is more inefficient, because the trade volumes continue to be low on this, which means we have to manage cash as well and it results in more paperwork and additional labour," said a senior executive at a state-owned bank, also part of the pilot.