Digital Rupee / Central Bank Digital Currency (e₹)

A ₹100 note and a ₹100 UPI transfer aren’t quite the same thing legally. The Digital Rupee is RBI’s attempt to create a third option: real central-bank money, in digital form.

📑 Contents

1Digital Rupee Basics and Legal Status
2How CBDC Works: Tiers, UPI Link, Programmability
3Test Yourself
4CBDC vs UPI and the Adoption Gap
5Current Affairs

🏛️ Must Know

1. Legal Tender Status

Amendment The Finance Act 2022 amended the RBI Act, 1934, giving the Digital Rupee legal tender status. This amendment took effect on 30 March 2022.
Wholesale Pilot RBI launched the wholesale CBDC pilot on 1 November 2022, for settling government-securities trades between banks.
Retail Pilot RBI launched the retail CBDC pilot (e₹-R) on 1 December 2022. It started in a closed group, in Mumbai, Delhi, Bengaluru, and Bhubaneswar.

2. What the e-Rupee Actually Is

Digital Token The e-Rupee is a digital token, not a bank deposit. A ₹100 e-Rupee token is worth exactly ₹100, with no credit risk, just like a paper note.
Not Crypto CBDC is not cryptocurrency. Cryptocurrency is a private asset. CBDC is sovereign currency, issued and backed directly by the RBI.
Not Inflation-Protected The e-Rupee has no built-in inflation-protection feature. It is at par with, and freely convertible against, both physical cash and commercial bank money — but its value simply tracks the rupee, just like a paper note.

🏘️ Good to Know

1. The Two-Tier Model

Two-Tier CBDC uses a two-tier model. The RBI issues digital rupees to banks, and banks then distribute them to the public and businesses.
Retail vs Wholesale Retail CBDC is for everyday public transactions. Wholesale CBDC is used only by banks and NBFCs, for interbank settlement.

2. UPI Link and Programmability

UPI Link The e-Rupee’s QR code became interoperable with UPI in 2023, letting merchants accept both payment types at one scanner.
In Development RBI is developing offline transaction support and programmability, so CBDC can work without internet access or be restricted to specific uses.
Programmable Spending CBDCs generally can be distributed with a condition programmed into them, such as a time-frame for spending or a restriction to a specific purpose (e.g. welfare payments usable only for food).
Bypassing SWIFT CBDCs also make it possible to settle cross-border payments without routing through the US dollar or the SWIFT messaging system — projects like mBridge test direct central-bank-to-central-bank settlement.

Test Yourself

⚡ Great to Know

1. UPI vs CBDC: Different Problems

Different Problems UPI and CBDC solve different problems. UPI moves money between existing bank deposits. CBDC creates an entirely new form of central-bank money itself.
Liability Their liability structure differs too. UPI moves money held as a commercial bank’s liability. CBDC held in a wallet is a direct liability of the RBI itself, just like physical cash. A common exam trap claims liability sits with “users and their banks” in both cases, but that collapses this real distinction.

2. Programmability and the Adoption Gap

Programmability Programmability is CBDC’s real edge over cash or UPI. A programmed token can be restricted to specific goods, which is exactly what welfare-subsidy pilots test.
Adoption Gap Actual usage still lags far behind UPI’s billions of monthly transactions, showing a real gap between the technology being ready and people actually adopting it.

📰 Current Affairs

1. PMGKAY Direct Benefit Transfer Rollout

14 Aug 2026 The government launched CBDC-based Direct Benefit Transfer under PMGKAY, in Chandigarh and Dadra & Nagar Haveli. These became the first UTs to move all eligible food-subsidy beneficiaries onto CBDC wallets. (Source: PIB)
Earlier Pilots This builds on earlier pilots: Gujarat (15 February 2026) and Puducherry (26 February 2026). It is the first large-scale use of CBDC in a Central Government welfare programme. (Source: PIB)
How It Works Beneficiaries get their food subsidy directly in a CBDC wallet, then spend it at empanelled merchants. Smartphone users pay via QR code; feature-phone users use an OTP-based method. (Source: PIB)

2. Adoption Numbers and New Platforms

Dec 2025 RBI Deputy Governor T. Rabi Sankar said retail CBDC transactions had crossed 120 million, worth over ₹28,000 crore, with about 8 million users. (Source: Business Standard)
Jan 2026 Cred and MobiKwik became the first non-bank platforms to offer e-Rupee wallets, built in partnership with Yes Bank. (Source: Business Standard)
FY2025-26 RBI ran welfare-linked CBDC pilots in Gujarat, Puducherry, and Chandigarh, disbursing food subsidies directly through programmable digital rupee tokens.