On December 1, India’s Central Bank, the Reserve Bank of India (RBI), launched its first pilot of a digital rupee for individual users, ahead of many major economies. The retail digital Rupee or e₹-R is a virtual token that represents legal tender. It will be available in the same denominations in which paper currency and coins are issued, the RBI said.
RBI noted that a digital rupee, which is guaranteed by the Bank, will be a safer option to risky cryptocurrencies. Sovereign digital currencies can provide for more efficient payment settlements reducing the reliance on cash. It could also allow greater insight into how money circulates in the economy.
The Central Bank Digital Currency (CBDC) is categorized into two broad categories: general-purpose or retail (CBDC-R) and wholesale (CBDC-W).
Retail CBDC is an electronic version of currency primarily intended for retail transactions, as opposed to Wholesale CBDC, which is intended for the settlement of interbank transfers and related wholesale transactions.
Some features of the CBDC:
- Sovereign currency issued by Central Banks
- Liability on the central bank’s balance sheet
- Accepted as a medium of payment, legal tender
- Freely convertible against commercial bank money and cash
- Holders need not have a bank account
- Lowers the cost of issuance of money and transactions
According to a Ministry of Finance release, “CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems. Supported by state-of-the-art payment systems of India that are affordable, accessible, convenient, efficient, safe, and secure, the Digital Rupee system will further bolster India’s digital economy, make the monetary and payment systems more efficient and contribute to furthering financial inclusion”
Last updated: December 26th, 2025
