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India’s Largest Banks, Lenders Gather Customers and Merchants to Test CBDC

2 mins
Updated by Kyle Baird
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In Brief

  • HDFC Bank has achieved significant participation in pilot programs for the e-rupee CBDC.
  • The integration of the central bank digital currency with UPI enables users to make payments using both the e-rupee and UPI .
  • The adoption of CBDCs is a global trend, with nearly two dozen central banks worldwide planning to introduce their digital currencies.
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Indian private lender HDFC Bank has successfully enrolled over 100,000 customers and 170,000 merchants in pilot programs utilizing the central bank digital currency (CBDC). The e-rupee initiative reportedly aims to explore the potential benefits of a digital alternative to physical cash.

Notably, the India CBDC pilot uses the widely adopted existing infrastructure of Indian UPI.

India CBDC Pilot Kicks Off With Digital Rupee Payments

HDFC Bank has integrated the CBDC with the United Payments Interface (UPI), an instant digital platform. According to reports, it is the first Indian bank to offer this interoperability.

BeInCrypto reported in May that the lender expanded its CBDC offerings on its mobile app.

The new integration will let merchants and customers make payments using e-rupee and UPI through a single Quick Response code.

The country is aiming to leverage blockchain distributed-ledger technology under the Reserve Bank of India (RBI) supervision. The apex bank has been pushing the e-rupee pilot as a medium for digital transactions since November 2022.

Take a minute to learn how to use e-rupee in our explainer here: EXCLUSIVE: Digital Rupee Tutorial — How to Use India’s CBDC e-Rupee

In a bid to promote the adoption of CBDC, the RBI previously called upon a wider range of lenders to participate in pilot programs. This move aligns with the global trend.

The Bank for International Settlements (BIS) recently reported that nearly two dozen central banks plan to introduce their CBDC by the decade’s end. This represents both emerging and advanced economies.

CBDCs Come to the Forefront

The development of CBDCs stems from the growing importance of digital payments among citizens. However, governments desire to prevent the complete reliance on private sector entities for digital financial services.

The Indian central bank is exploring the potential for wholesale and retail CBDCs to facilitate transactions. Notably, even countries that have not taken a definitive stance on private cryptocurrencies are investing in developing digital versions of their national currencies. 

India, for instance, has refrained from providing clear legal jurisdiction for private cryptocurrencies. However, it has simultaneously brought crypto within the purview of taxation.

The pilot programs initiated by HDFC Bank represent a significant stride in the modernization of the financial ecosystem, particularly in light of the increasing prevalence of CBDCs as a transformative force.

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Shraddha Sharma
Shraddha is an India-based journalist who worked in business and financial news before diving into the crypto space. As an investment enthusiast, she has also has a keen interest in understanding crypto from a personal finance standpoint.