Union Bank to credit staff benefit claims to CBDC wallets, instead of salary accounts

Union Bank of India

Public sector lender Union Bank of India (UBI) plans to provide credit for various employee benefit claim amounts directly to CBDC (Central Bank Digital Currency) Wallet, instead of salary drawing account over a period, according to the bank's internal circular that Moneycontrol reviewed.
CBDC is a digital form of paper currency.

The legal tender is backed by the RBI and is called Digital Rupee.

"In order to promote digital rupee, the bank is planning to provide credit of various employee benefits claim amounts directly to CBDC wallet, instead of employee salary drawing account over a period. The necessary system changes are already under progress," a December 26 circular said.

The circular added that on a pilot basis, UBI has decided to credit the newspaper allowance in advance for December 2023 directly to the CBDC wallet of eligible employees.

"For the officers, it will be credited on December 27 and for award staff on December 29. As such, employees are not required to apply for newspaper allowance for December 2023 in Union Parivar. The amount credited in the CBDC Wallet of the employee can be used in transactions or may be redeemed to their respective accounts," the circular said.

However, employees who do not have the CBDC Wallet or whose newspaper allowance could not be credited due to any technical issue, will get the credit of the allowance to their salary drawing account, the circular said.

As part of promoting CBDC Wallet transactions, banks have been advised to encourage all staff members to transact using the digital currency and ensure 100 percent staff registrations on the digital rupee app.

The Reserve Bank of India (RBI) has met its target of hitting a million daily transactions in the retail segment of its Central Bank Digital Currency (CBDC) by the end of 2023. "We also made significant strides in the usage of the e-rupee (CBDC) and exceeded the milestone of one million transactions in a day on December 27, 2023," Das wrote in an end-of-the-year letter to RBI staff on December 29. Moneycontrol has reviewed a copy of the letter.

The RBI, which launched the pilot project for the retail e-rupee on December 1, 2022, has been looking to push volumes of the digital currency so that it can learn more about how the public uses it. In recent weeks, commercial banks have even offered incentives such as cash-backs to promote the use of the retail CBDC and sign up new users.