October 30, 2023

India Drives E-Rupee Adoption Amidst CBDC Challenges

India encourages e-rupee adoption despite CBDC challenges, using incentives to sway consumers. But worries about financial surveillance and government control overshadow these efforts.

Central bank digital currencies (CBDCs) have sparked discussions on the future of money, promoting promises of enhanced efficiency, fortified security, and reduced administrative costs compared to conventional cash. Nevertheless, the general public's apprehension remains robust, primarily due to concerns about financial surveillance and government intrusion.

This wariness has led to setbacks in significant CBDC projects. For instance, Nigeria’s e-naira, initiated in October 2021, has struggled to gain substantial traction, while Japan's digital yen was abandoned in August 2022 due to a lack of public interest. Despite these setbacks, India is now taking steps to stimulate the use of its e-rupee by introducing incentives.

India’s Incentive Drive for E-Rupee

The Reserve Bank of India (RBI) has directed banks to introduce incentives to promote the use of e-rupee among the public. Although the retail e-rupee pilot commenced in November 2022, RBI data revealed that only ₹5.7 crore ($684.5k) had been transacted five months after its launch.

The RBI has set an ambitious goal to gradually establish the e-rupee as the primary form of payment in the country. However, transforming entrenched consumer and business preferences for cash payments poses a significant challenge.

To encourage the adoption of e-rupee over cash, retail users are offered incentives such as cashback on purchases and reward points exchangeable for travel bookings, mobile phone charging, and road toll payments. Despite these efforts, the RBI faces an uphill battle due to concerns about how CBDCs might encroach upon financial liberties.

Concerns Surrounding CBDCs

The worldwide rollout of CBDCs has triggered apprehension among individuals worried about potential infringements on financial freedoms. Think tanks like the Heritage Foundation in the US have highlighted that CBDCs could offer central banks an unprecedented level of insight into individual spending habits, thereby enabling the tracking and potentially controlling of financial transactions.

The centralization of CBDCs, coupled with their programmable nature, raises concerns about providing authorities with excessive power and control over the financial system. Critics argue that this could lead to a loss of financial privacy and autonomy for individuals and could be subject to misuse by governments or other influential entities.

On the Other Hand

Despite incentives, cash isn’t expected to vanish abruptly. Many central banks persist in developing CBDCs despite public skepticism.


India's endeavor to increase e-rupee usage showcases the challenges in steering consumer behavior away from conventional cash payments toward newer digital currencies. Moreover, there's a growing concern about the potential implications of CBDCs for financial surveillance and governmental control, issues that minor incentives may not easily alleviate.

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