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- Banks in India have introduced cashback and rewards to spur e-rupee transactions in the country.
- Large banks like HDFC and smaller lenders like Yes Bank and IDFC First Bank have introduced such incentives.
- The e-rupee, which launched last year, has struggled to hit the transaction target set by the Reserve Bank of India.
Banks in India are pooling efforts to boost the popularity and use of the e-rupee, a central bank digital currency launched by the Reserve Bank of India, a local news outlet reported, citing three sources. The recent development comes on the heels of the central bank’s effort to attract users and drive transactions.
According to the report, the banks have introduced certain incentives, such as cashbacks and rewards, to drive e-rupee use upward. The sources said these benefits are similar to what the banks traditionally offer on credit and debit cards.
The report noted that HDFC Bank, India’s largest private lender, has put out such incentives to spur the rise of e-rupee transactions, according to Parag Rao, a top executive at the bank. However, Rao didn’t give specific details on the incentive offerings.
Likewise, smaller firms like Yes Bank and IDFC First Bank have also followed with similar incentives. That includes reward points that may be redeemed for car rentals, phone recharges, and cashback through FastTag, a highway toll collection system. A spokesperson for Yes Bank said the incentives form part of the bank’s digital strategy to drive adoption.
Additionally, the report noted that other banks, such as Union Bank and ICICI Bank, are also expected to roll out similar incentives. However, it is important to note that the banks will fund the incentives themselves.
Following its launch last December, the e-rupee has struggled to take over. Per the report, the digital tokens transactions hover around 25,000 a day, a far shot from the central bank’s preferred target of a million transactions daily by year-end.
On its own part, the central bank has also introduced features in an effort to draw users. That includes tying the virtual currency to India’s well-liked real-time payments network, Unified Payment Interface (UPI).
The CBDC launch follows similar efforts from other Central Banks to tap into the booming digital assets economy. Nigeria, for instance, has introduced CBDCs, though the report noted they have had limited success. Nonetheless, countries continue to indicate interest in CBDCs, with many gearing up to launch in the near term.
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