India’s Digital Rupee Gets a Turbocharge—RBI Expands CBDC Experiment to Retail Payments

Move over, UPI—the Reserve Bank of India is doubling down on its digital rupee play. The central bank just greenlit pilot programs for retail CBDC transactions, a sharp pivot from its wholesale-only approach.

Why now? With private cryptos circling like vultures (and regulators scrambling to rein them in), the RBI’s betting a sovereign digital currency can outmaneuver both volatile assets and sluggish legacy banking. Early trials processed $134M in transactions—peanuts next to India’s $3T+ digital payment market, but a foothold nonetheless.

The real test? Whether bureaucrats can make CBDCs as frictionless as the private sector’s fintech darlings. Given their track record with, say, tax portals, we’re not holding our breath.

How is the RBI Testing the Digital Rupee?

Through meticulously planned pilot programmes, the RBI is currently testing the digital rupee’s retail and wholesale versions. 600,000 users from 17 banks are part of the retail CBDC pilot, which enables certain consumers and merchants to conduct business using digital wallets that the participating banks provide. 

The wholesale pilot, meanwhile, focuses on the interbank market and has recently expanded its reach by adding four standalone primary dealers (SPDs). To increase institutional and public participation, the RBI has also made the CBDC wallet available to some non-banks. This shift aims to scale adoption and make the digital rupee more widely available.

Why Is The RBI Leading in Digital Payments?

RBI is at the forefront of digital financial innovation, as proved by its dominance in international real-time payments. According to the report, during the fiscal year 2024–2025, the volume of digital payments increased by an astounding 34.8%, while their value increased by 17.9%. By volume, the Reserve Bank of India’s flagship programme, the Unified Payments Interface (UPI), accounts for 48.5% of all real-time payments worldwide. 

The dedication of the RBI to financial inclusion has been strengthened by innovative features like “Delegated Payments,” which enable a secondary user to make UPI transactions from a primary user’s account up to a predetermined limit. These features have expanded the advantages of digital payments to larger societal segments.

With the introduction of cross-border use cases in its upcoming development phase, RBI is taking decisive action to increase the usefulness of the digital rupee. In line with global CBDC interoperability initiatives like mBridge, which is spearheaded by the Bank for International Settlements, the 2024–2025 annual report details plans to test the digital rupee for international transactions through bilateral and multilateral collaborations. 

The RBI wants to position the digital rupee as a tool for international trade settlement, especially in rupee-linked corridors, like China and Singapore have done. This could lessen dependency on the U.S. dollar and improve trade efficiency.

In FY25, the digital rupee’s circulation reached ₹1,016.46 crore ($122.1 million), a 334% year-over-year increase, according to the RBI , despite difficulties in retail adoption. Institutional involvement in the wholesale market, bolstered by top-down initiatives like public sector banks offering e-rupee incentives and using it to pay employee salaries, is primarily responsible for this increase. Retail transaction volumes, which exceeded one million by June 2025, are still below the initial goal of one million daily transactions, suggesting that more work is necessary to achieve organic consumer adoption.

With its ambitious digital rupee initiative, the RBI is leading the charge to transform India’s financial ecosystem. The RBI is establishing India as a leader in the global CBDC scene by growing pilot programmes, implementing cutting-edge features like programmability and offline capabilities, and investigating cross-border use cases.

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