Bank of Baroda is aiming to increase the number of active CBDC users to 10 lakh by the end of the current financial year from 2.5 lakh users at present, Executive Director Joydeep Dutta Roy said on the sidelines of FIBAC 2023, organised jointly by FICCI and the Indian Banks’ Association (IBA).
RBI has assigned individual targets to every bank and Bank of Baroda is on track to achieve these targets, Roy said without quantifying the targets. As the ecosystem grows and more users understand the usage and different features of CBDC, customer on-boarding will gather pace, he added.
RBI had earlier said it is aiming for 10 lakh retail CBDC transactions per day by the end of 2023. The central bank will be meeting banks on November 24 for a periodic review of progress on CBDC.
Discussions are on to extend the CBDC platform to the general public, Roy said, adding that the pilot has now been expanded to 80 cities from the earlier 20 cities, which in itself should help the ecosystem grow. Further, the central bank has also removed the earlier requirement of “white listing” users, which means that all users can now be on-boarded, he added.
For the state-owned lender, the number of CBDC transactions has increased from 200-300 per day to over 2,000 daily transactions, Roy said. He added that this is on a smaller user base and as the number of users grows to 10 lakh, the number of transactions should also rise to about 10,000 transactions per day.
Banks such as YES Bank and State Bank of India have been offering incentives to users to initiate CBDC transactions. More banks may adopt measures such as cashbacks and promotions as part of their awareness building and promotional activities, Roy said without commenting on whether Bank of Baroda has any such plans.
On the wholesale CBDC pilot, Roy said that while volumes have stabilised in the government securities market, the pilot for call money market is still in the initial stages due to which volumes are not large and “yet to pick up”.
Unsecured risk weights
On the recent RBI move to increase risk weights on unsecured consumer loans by 25 percentage points, Roy said lending has to be within the risk covenants and that Bank of Baroda would ensure that it is not lending aggressively in this segment while looking at the risk aspects.
MD and CEO, Debadatta Chand, said the capital impact of the new norms is estimated to be around 40-50 bps, in line with other banks. He added that the bank is yet to take a call on whether it will raise capital to absorb this impact or pass on some of the hit to borrowers through higher lending rates.
Roy added that the bulk of the bank’s unsecured loans are to existing and salaried customers, owing to which it does not expect a significant impact. Even so, the bank will monitor the segment and review and monitor borrower profiles, cash flows and credit history to grow the portfolio in a calibrated manner.
BoB World
Asked about the progress on RBI’s dictat to stop on-boarding customers via the BoB World mobile application due to recent instances of fraud in customer acquisition, Roy said the central bank’s compliance is on and the bank’s audit report is “in progress” for submission to RBI.
Chand added that there has been no impact on the bank’s deposit mobilisation due to this temporary suspension.