A central bank digital currency (CBDC) is money issued by a central bank in digital form. India's CBDC is the digital rupee (e₹). In law it is a bank note, it is legal tender and it is a liability of the RBI, just like the notes in your wallet, but it lives in an app on your phone. The RBI has been running pilots since November 2022: a wholesale version (e₹-W) for banks and a retail version (e₹-R) for the public. This part explains what the e₹ is, how it differs from UPI, bank deposits and crypto, the law behind it, how it is designed and distributed, what the circulation data show, and how India's project compares with the e-CNY, the digital euro and the BIS cross-border projects. On 9 October 2026 the RBI's weekly data showed ₹1,140.26 crore of e₹ in circulation.
This part builds on the functions and responsibilities of the RBI, where currency issue is one of the core functions, and on Part 1's short note on the e-rupee in the history and evolution of the RBI. Physical cash is covered in currency in circulation, and where currency sits on the RBI's books is covered in the RBI balance sheet.
In the news
- 9 October 2026: e₹ in circulation reaches ₹1,140.26 crore. The RBI's weekly currency data show retail e₹ of ₹1,140.26 crore and wholesale e₹ of zero, against physical currency of about ₹43.33 lakh crore. Almost all of it is now held in ₹1 tokens. Why it matters for the exam: the e₹ is reported alongside notes and coins as part of currency, but it is still about 0.03% of the total.
- 1 October 2026: RBI updates its e₹ FAQs. 19 banks now offer retail e₹ wallets, the wholesale pilot has 16 participants, and e₹-W has four use cases, including tokenised certificates of deposit and corporate bonds. Why it matters for the exam: the RBI's own FAQ page is the best source for the latest count of pilot banks.
- 15 September 2026: ECB calls for digital euro pilot merchants. The ECB opened a call for online and mobile merchants to join its digital euro pilot, which it is preparing for 2027, with a first issuance possible in 2029. Why it matters for the exam: the euro area is the largest advanced economy actively preparing a retail CBDC.
- 29 May 2026: Annual Report shows a fall in e₹ holdings. The RBI's Annual Report 2025-26 put e₹ in circulation at ₹771.7 crore on 31 March 2026, against ₹1,016.5 crore a year earlier, and listed new programmable pilots in direct benefit transfer (DBT) schemes. Why it matters for the exam: a fall of about 24% in a year is a likely numerical question.
- 23 April 2026: Reuters reports about 10 welfare pilots. Reuters, as reported by CoinDesk, said the RBI was running about 10 pilots that route welfare payments through the e₹, and that the e₹ had about 10 million users. Why it matters for the exam: programmable payments for government schemes are now the main use case.
- 15 February 2026: first CBDC-based Public Distribution System. Union Home Minister Amit Shah launched a pilot in Gandhinagar under which food subsidies reach beneficiaries in Ahmedabad, Anand, Valsad and Surat as programmable e₹ coupons, redeemable for foodgrains at fair price shops. Why it matters for the exam: this is the flagship example of programmable CBDC in India.
- January 2026: e-CNY becomes a deposit liability. The Atlantic Council's CBDC tracker reports that China reclassified the e-CNY as deposit liabilities in January 2026, after it had processed over 3.4 billion retail transactions by December 2025. Why it matters for the exam: the world's biggest retail CBDC pilot has moved away from the pure "digital cash" model.
- October 2025: CAT Sandbox and Unified Markets Interface announced. At the Global Fintech Fest 2025, the RBI announced a CBDC and Asset Tokenisation (CAT) Sandbox and the Unified Markets Interface (UMI), on which certificates of deposit were issued in tokenised form and settled in wholesale CBDC. Why it matters for the exam: e₹-W is becoming the settlement asset for tokenised markets.
What a CBDC is
The RBI's definition
The RBI's Concept Note of October 2022 "broadly defines CBDC as the legal tender issued by a central bank in a digital form". It is exchangeable one-to-one with physical currency and appears as a liability on the central bank's balance sheet. That last point is what makes a CBDC different from almost all the digital money people already use.
Three kinds of money
Most money in India is already digital, but it is not central bank money. It helps to separate three kinds:
- Central bank money is a claim on the RBI. Today it takes three forms: banknotes (and coins, which are issued by the government), the reserves that banks hold in their accounts with the RBI, and now the e₹.
- Commercial bank money is a bank deposit, a claim on a private bank. When you pay through UPI, NEFT or a debit card, you are moving bank deposits from one account to another.
- Private crypto-assets such as bitcoin are not claims on anyone. They have no issuer and are not legal tender.
The e₹ brings the safety of central bank money (no credit risk, settlement finality) to the convenience of a phone wallet.
e₹ vs UPI vs bank deposits vs crypto
The RBI's FAQ puts the key distinction simply: "e₹ is a digital form of ₹ whereas UPI is a means of payment." UPI is a payment system run by NPCI that sends instructions between bank accounts. The e₹ is a form of money that can be held as a store of value in a wallet, outside any bank account.
| e₹ (retail CBDC) | Cash | Bank deposit (via UPI) | Crypto-asset | |
|---|---|---|---|---|
| Whose liability? | RBI | RBI (notes) | Commercial bank | Nobody |
| Legal tender? | Yes (s. 26, RBI Act) | Yes | No | No |
| Earns interest? | No | No | Savings deposits do | No |
| Form | Digital token in a wallet | Paper and metal | Account balance | Entry on a blockchain |
| Settlement | Instant, wallet to wallet | Instant, hand to hand | Through banks (UPI settles in cycles) | On the network |
| Who runs it? | RBI issues; banks distribute | RBI issues; banks distribute | Banks and NPCI | Private network |
The legal basis
Budget 2022 and the Finance Act, 2022
On 1 February 2022 the Finance Minister announced in the Union Budget that the RBI would introduce a digital rupee from 2022-23. The law was changed through the Finance Act, 2022 (Act 6 of 2022), section 125, which amended the RBI Act, 1934 in two ways:
- Section 2(aiv) was inserted, defining a "bank note" as "a bank note issued by the Bank, whether in physical or digital form, under section 22".
- Section 22A was inserted: "Nothing contained in sections 24, 25, 27, 28 and 39 shall apply to the bank notes in digital form".
The text of Section 22 itself, which gives the RBI the "sole right to issue bank notes in India", did not change. Because "bank note" now includes digital form, that sole right now covers the e₹ too.
What the amendments do
The new definition brings the e₹ under all the provisions that apply to bank notes, including Section 26, under which every bank note is legal tender throughout India and is guaranteed by the Central Government. The RBI's FAQ says this in so many words: "e₹, being a digital form of the ₹ bank note, is legal tender and is the liability of Reserve Bank of India."
Section 22A switches off the sections that only make sense for paper:
| Section | Subject | Why it is excluded |
|---|---|---|
| 24 | Denominations of notes | Digital tokens do not need fixed note denominations by law |
| 25 | Form of bank notes (design and material) | There is no paper or design |
| 27 | Re-issue of notes | Re-issuing soiled notes has no digital meaning |
| 28 | Recovery of lost, stolen, mutilated notes | Wallets are recovered through the app |
| 39 | Obligation to supply different forms of currency | Applies to exchanging notes and coins |
The Concept Note of October 2022
On 7 October 2022 the RBI released its Concept Note on Central Bank Digital Currency, prepared by its FinTech Department. It followed an internal Working Group set up in October 2020. The Note set out the reasons for a CBDC and the main design choices.
Why India wants a CBDC
The Note lists the key motivations as:
- reducing the operational cost of managing physical cash;
- fostering financial inclusion;
- bringing resilience, efficiency and innovation to the payments system;
- adding efficiency to the settlement system;
- boosting innovation in cross-border payments; and
- giving the public the uses that private virtual currencies offer, "without the associated risks".
It also noted that an offline feature would help in remote areas and when power or mobile networks fail.
Five design choices
The Note framed five choices, and India's answers are worth learning:
| Design choice | Options | India's choice |
|---|---|---|
| Type | Retail (CBDC-R) or wholesale (CBDC-W) | Both |
| Issuance model | Direct (single tier) or indirect (two tier) | Two tier: RBI issues, banks distribute |
| Form | Token-based or account-based | Token-based for retail; account-based considered for wholesale |
| Remuneration | Interest-bearing or not | Not interest-bearing |
| Anonymity | Full, partial or none | "Reasonable anonymity" for small retail payments, like cash |
Token or account. A token-based CBDC is a bearer instrument like a banknote: "whosoever holds the tokens at a given point in time would be presumed to own them". The person receiving a token verifies that it is genuine. In an account-based system, an intermediary verifies the identity of the account holder. The Note preferred tokens for retail because they are "closer to physical cash", and it favoured fixed denominations, the same as paper notes and coins.
No interest. The Note argued that an interest-bearing, "deposit-like" CBDC could pull deposits out of banks and weaken their capacity to lend, and that since cash pays no interest, a non-interest-bearing CBDC "would be more logical".
The pilots: e₹-W and e₹-R
Wholesale pilot from 1 November 2022
The first pilot, in wholesale e₹ (e₹-W), began on 1 November 2022. Its use case was the settlement of secondary market transactions in government securities. The RBI said settlement in central bank money would cut costs by removing the need for a settlement guarantee or collateral. Nine banks took part: SBI, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC.
By October 2026 the wholesale pilot had 16 participants, banks and non-banks, and four use cases:
- settlement of secondary market trades in government securities;
- settlement of inter-bank borrowing and lending in the call money market;
- tokenised issuance and settlement of certificates of deposit;
- tokenised issuance and settlement of corporate bonds.
Wholesale e₹ is used for settlement and then returned, so end-of-period balances are tiny: ₹10.69 crore at end-March 2023, ₹0.08 crore at end-March 2024 and nil since.
Retail pilot from 1 December 2022
The retail e₹ (e₹-R) pilot began on 1 December 2022 in a closed user group of customers and merchants. The RBI's press release of 29 November 2022 set out its features:
- it is "a digital token that represents legal tender";
- it is issued in the same denominations as paper currency and coins;
- it is distributed through banks and held in a digital wallet on a phone;
- it allows person-to-person (P2P) and person-to-merchant (P2M) payments, with QR codes at shops;
- like cash, it earns no interest and can be converted into other forms of money such as bank deposits.
The first phase used four banks (SBI, ICICI Bank, Yes Bank and IDFC First Bank) in four cities: Mumbai, New Delhi, Bengaluru and Bhubaneswar. Four more banks (Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank) were to join later, and nine more cities were named: Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. By October 2026, 19 banks offered e₹ wallets.
How the e₹ is issued and distributed
The two-tier model
The RBI uses the indirect, two-tier model described in the Concept Note. The RBI creates e₹ and issues it electronically to banks and non-banks (called Token Service Providers in the Note). They onboard customers, open wallets, carry out KYC and handle disputes. This is "akin to the current physical currency management system", in which the RBI prints notes and banks hand them out through branches and ATMs.
A user loads e₹ by debiting their bank account, which is just like withdrawing cash at an ATM: the deposit falls and central bank money in the user's hands rises. Redeeming e₹ to the bank account is like depositing cash. Both can be done 24 hours a day, 7 days a week. There is no minimum balance and no charge, and payments can be made to two decimal places.
Wallets were first opened only for savings bank account holders, which avoided a separate KYC. For DBT and similar programmable use cases, the RBI now allows beneficiaries to onboard with mobile and/or Aadhaar authentication, without a savings account.
Change and denominations
Because the retail e₹ is issued in denominations, a wallet holds tokens of ₹500, ₹200, ₹20 and so on, just like a purse. The wallet makes change automatically. The RBI's own example: to buy a ₹15 item with only a ₹20 token, you enter ₹15; the merchant receives ₹15 and ₹5 stays in your wallet.
Non-bank wallets
On 5 April 2024 the RBI proposed allowing non-bank payment system operators to offer CBDC wallets, to widen access and test the platform's ability to handle transactions through many channels. The RBI's FAQ now refers to wallets "offered by banks and non-banks". Its list of wallet apps, however, names only the 19 banks.
Features: programmability, offline and UPI QR
Programmability
On 8 February 2024 the RBI announced that it would add programmability and offline functionality to the retail pilot. Programmability lets a sponsor, such as a government agency or a company, decide how the money can be spent. The RBI's examples: government agencies can ensure that payments go only to "defined benefits", and companies can program specified expenses such as employees' business travel. The FAQ lists the parameters that can be programmed: expiry date, geo-location, merchant category codes and merchant VPA. The app shows the user any conditions attached to the e₹ in the wallet.
In 2025-26 the RBI introduced user-level programmability, which lets individuals send programmed e₹ to other individuals. Several government agencies began DBT pilots that use programmable e₹, and e-Kuber, the RBI's core banking system, was enabled to make government DBT payments in CBDC, with the RBI as sponsor bank and the Aadhaar number as identifier.
The PDS pilots
The best-known example is the Public Distribution System (PDS). On 15 February 2026, at Mahatma Mandir in Gandhinagar, Amit Shah launched what the government called the country's first CBDC-based PDS. Digital coupons generated through the RBI are credited to beneficiaries as programmable e₹. They can be redeemed only for entitled foodgrains at fair price shops, using a QR code or coupon code. Fair price shop dealers receive their margins in real time. The first phase covered Ahmedabad, Anand, Valsad and Surat, and later phases were planned for the Union Territories of Puducherry, Chandigarh, and Dadra and Nagar Haveli and Daman and Diu. The RBI's Annual Report 2025-26 says PDS beneficiaries in Gujarat, Puducherry and Chandigarh received food subsidies as programmable CBDC.
Offline payments
An offline e₹ would work like cash where there is no internet signal. The RBI said in February 2024 that it would test proximity-based solutions (where two phones are close together, such as Near Field Communication) and non-proximity solutions across hilly, rural and urban areas. The Annual Report 2025-26 says both NFC and SMS-based solutions are still being tested, and the FAQ says "different solutions are being explored". One of the three problem statements in the RBI's HaRBInger 2025 hackathon was "Offline CBDC (e₹)".
UPI QR interoperability
At first, e₹ could be paid only at a CBDC QR code. Now e₹ apps can also scan a UPI QR code, so a shop that accepts UPI also accepts e₹. There is a difference in how the payment settles. A payment at a CBDC QR moves e₹ between two wallets and settles instantly, "without passing through user's bank accounts". A payment at a UPI QR settles on UPI timelines. In 2025-26 the BHIM app was also enabled to discover existing CBDC wallets.
How much e₹ is in circulation
The data
The RBI publishes e₹ in circulation by denomination, in the weekly currency release and in the Handbook of Statistics (Table 152). The end-March values are:
| End-March | Retail e₹ (₹ crore) | Wholesale e₹ (₹ crore) | Total e₹ (₹ crore) |
|---|---|---|---|
| 2023 | 5.70 | 10.69 | 16.39 |
| 2024 | 234.04 | 0.08 | 234.12 |
| 2025 | 1,016.50 | nil | 1,016.50 |
| 2026 | 771.66 | nil | 771.66 |
| 9 October 2026 | 1,140.26 | 0.00 | 1,140.26 |
Reading the numbers
Growth, then a fall. e₹ in circulation grew more than fourteen-fold in 2023-24 and by 334% in 2024-25, the figure the RBI reported in its Annual Report 2024-25:
- 1,016.50 ÷ 234.12 = 4.342, so the increase was 4.342 − 1 = 334.2%.
It then fell in 2025-26:
- Fall = 1,016.50 − 771.66 = ₹244.84 crore.
- Percentage fall = 244.84 ÷ 1,016.50 × 100 = 24.1%.
Since March 2026 it has recovered:
- Rise to 9 October 2026 = 1,140.26 − 771.66 = ₹368.60 crore, or 368.60 ÷ 771.66 × 100 = 47.8% in about six months.
Why the fall? The Annual Report gives the two numbers but no reason. Three points help explain it:
- The e₹ is a payment instrument that pays no interest. By design, people have little reason to keep large balances in it. Holdings rise and fall with how much is loaded for spending at a given moment, so a single end-March figure can move a lot.
- Earlier numbers were boosted by drives. In December 2023, banks credited some employees' salaries to e₹ wallets, and the pilot crossed one million retail transactions in a day. CoinDesk reports that this level did not last. Year-end pushes of this kind inflate a single-date stock figure.
- The pilot changed focus. In 2025-26 the RBI moved from general P2P and P2M use to targeted, programmable uses such as DBT, PDS and tokenisation. Programmable e₹ is often spent soon after it is received.
From ₹500 tokens to ₹1 tokens. The denomination mix also changed sharply. At end-March 2025, ₹857.68 crore of the ₹1,016.50 crore retail total, or 84.4%, was in ₹500 tokens. At end-March 2026, ₹771.25 crore of ₹771.66 crore, or 99.9%, was in ₹1 tokens, and on 9 October 2026 ₹1,139.86 crore of ₹1,140.26 crore was in ₹1 tokens: about 1,140 crore separate ₹1 tokens. The RBI has not published an explanation for this change. Since the wallet makes change automatically, the user does not see it.
Still tiny. On 9 October 2026, banknotes and coins in circulation totalled about ₹43,32,982 crore (₹43.3 lakh crore). The e₹ was:
- 1,140.26 ÷ (43,32,982 + 1,140.26) × 100 ≈ 0.026% of all currency, or about ₹1 of e₹ for every ₹3,800 of cash.
Compare that with UPI, which handled about 24,162 crore transactions in 2025-26. The e₹ is a pilot, not yet a rival to cash or UPI.
Risks and safeguards
Bank disintermediation
The biggest concern for any central bank is disintermediation: if people move deposits out of banks into CBDC, banks have less money to lend, and in a crisis a run could happen at the click of a button. The Concept Note discusses both risks and says they "can be addressed through appropriate limits on CBDC holdings and transactions", although caps also make a CBDC less attractive.
Worked example. Suppose customers move ₹100 crore from savings deposits into e₹ wallets. With CRR at 3% and SLR at 18% (see CRR and SLR):
- Before, the bank had to keep 21% of that ₹100 crore as CRR and SLR, so it could lend up to ₹100 × (1 − 0.21) = ₹79 crore of it.
- After the switch, the deposit is gone, and so is that ₹79 crore of lending capacity.
- The bank's reserve requirements also fall by ₹21 crore, but it must replace ₹79 crore of funding from costlier sources, such as bulk deposits or market borrowing, or lend less.
Multiply this across the system and you see why the RBI pays no interest on e₹ and why other central banks plan holding limits. The ECB, for example, has tested hypothetical digital euro holding limits of up to €3,000 per person. The RBI's FAQ does not mention any holding limit on the e₹.
Privacy
Cash leaves no trail. Every digital payment does. The Concept Note admits that "all digital transactions would leave some trail" and suggests "reasonable anonymity for small value transactions" for retail CBDC. Programmability, which records who received e₹ and where it was spent, increases the tension. The token design, under which the holder is presumed to own the token, and offline payments are the main ways a CBDC can come closer to cash-like privacy.
Other risks
- Monetary policy and liquidity. When people load e₹, deposits fall and bank reserves fall with them, just as when people withdraw cash. A large, sudden shift would drain liquidity, and the RBI would need to offset it through its operations (see open market operations and liquidity). The Note also discusses interest-bearing CBDC as a possible new channel of monetary transmission, but India chose not to pay interest.
- Cyber and operational risk. A national digital currency is a target for attacks and must keep working when systems fail.
- Cost and take-up. A CBDC brings little benefit if people do not use it, and UPI already offers instant, free payments.
The global picture
Where countries stand
The Atlantic Council's CBDC tracker (May 2026) counts 146 countries and currency unions, representing over 98% of world GDP, exploring a CBDC, up from 87 in May 2022. Of these, 77 are at an advanced stage (development, pilot or launch). Only three have fully launched a retail CBDC: the Bahamas, Jamaica and Nigeria. Canada, Australia and Norway have deprioritised retail CBDCs.
China: the e-CNY
China's e-CNY is the largest CBDC pilot in the world. Testing began in April 2020 in Shenzhen, Suzhou, Chengdu and Xiong'an. By December 2025 it had processed more than 3.4 billion retail transactions, worth about 16.7 trillion renminbi. According to the Atlantic Council tracker, the e-CNY was reclassified as deposit liabilities in January 2026, a step away from the "digital cash" model.
The euro area: the digital euro
The European Commission proposed a regulation to establish the digital euro on 28 June 2023. In October 2025 the ECB's Governing Council decided to move to the next phase. The Eurosystem is preparing a pilot in 2027 and aims to be ready for a possible first issuance in 2029, "assuming the necessary EU legislation is adopted in the course of 2026". The digital euro would pay no interest, would have a holding limit, and would offer cash-like privacy for offline payments.
The United States: against a CBDC
On 23 January 2025 President Trump signed an executive order on digital financial technology that prohibits federal agencies "from undertaking any action to establish, issue, or promote CBDCs" in the United States or abroad, and ends any ongoing CBDC plans. The Atlantic Council describes the US as the only G20 country not exploring a CBDC. The New York Fed still takes part in wholesale cross-border research through Project Agorá.
BIS projects
- mBridge: a shared platform for cross-border payments in wholesale CBDCs. Its founding partners were the central banks of Hong Kong, Thailand, China (the PBOC's Digital Currency Institute) and the UAE, and Saudi Arabia joined in 2024. The RBI was one of about 30 observers. After the project reached the minimum viable product stage in mid-2024, the BIS handed it over to the partners in October 2024.
- Agorá: explores tokenised wholesale cross-border payments, in which tokenised central bank reserves and tokenised commercial bank deposits sit on one programmable platform. Central banks including the Bank of England, Bank of France (for the Eurosystem), Bank of Japan, Bank of Korea and Swiss National Bank take part, with over 40 private financial firms. Its report was published on 27 May 2026.
- Nexus: links countries' fast payment systems, not CBDCs, so that one connection reaches many countries. In 2025 the central banks of India, Indonesia, Malaysia, the Philippines, Singapore and Thailand set up Nexus Global Payments to take it live. UPI, not the e₹, is India's link.
- Rialto and Mandala: in 2025-26 the RBI joined Project Rialto and Phase 2 of Project Mandala, two BIS Innovation Hub projects on cross-border payments.
The cross-border angle and the rupee
The RBI sees cross-border payments as one of the strongest uses of CBDC. In 2025-26 it signed an MoU on digital asset collaboration with the Monetary Authority of Singapore (MAS) and held talks with MAS and the Central Bank of the UAE on running a cross-border CBDC pilot. For 2026-27 it plans to explore bilateral and multilateral cross-border CBDC pilots with select use cases. In January 2026 it was reported that the RBI had urged the government to propose linking BRICS members' CBDCs at the bloc's 2026 summit.
This ties into the internationalisation of the rupee. If an Indian importer could pay a UAE exporter in e₹, settled instantly and in central bank money, the trade would need no dollar leg and no chain of correspondent banks. Such links could cut costs and settlement risk and make rupee invoicing more attractive. They also carry geopolitical risk, since the US has threatened tariffs on countries pursuing alternatives to the dollar. Exchange rate policy and reserves are covered in exchange rate management and India's forex reserves.
Common exam traps
e₹ vs e-RUPI. e-RUPI is a prepaid, purpose-specific e-voucher on NPCI's platform, launched on 2 August 2021. It is backed by bank money and is not a CBDC. The e₹ is the RBI's own digital currency.
e₹ vs UPI. UPI is a payment system that moves bank deposits. The e₹ is money, a liability of the RBI. An e₹ wallet can pay at a UPI QR code, but that does not make it UPI.
Which section? The Finance Act, 2022 inserted Section 2(aiv) (definition of bank note, physical or digital) and Section 22A (exemptions). The RBI's sole right of issue is in Section 22, and legal tender status comes from Section 26.
Which came first? Wholesale (1 November 2022) came before retail (1 December 2022).
Token vs account. India's retail e₹ is token-based. The Concept Note suggested an account-based design for wholesale.
Interest. The e₹ pays no interest, like cash. That is a deliberate guard against disintermediation.
Nexus is not a CBDC project. It links fast payment systems such as UPI.
Key facts at a glance
| India's CBDC | Digital rupee (e₹): e₹-W (wholesale) and e₹-R (retail) |
| Announced | Union Budget, 1 February 2022 |
| Legal change | Finance Act, 2022 (s. 125): RBI Act s. 2(aiv) and s. 22A |
| Legal tender | Yes, under s. 26 of the RBI Act; a liability of the RBI |
| Concept Note | 7 October 2022 |
| e₹-W pilot | From 1 November 2022; G-sec settlement; 9 banks at start |
| e₹-R pilot | From 1 December 2022; 4 banks, 4 cities at start |
| Design | Two-tier (indirect); token-based retail; no interest |
| Wallet providers | 19 banks (FAQ, 1 October 2026), plus non-banks |
| e₹-W today | 16 participants; 4 use cases |
| Programmability and offline | Announced 8 February 2024 |
| Non-bank wallets | Proposed 5 April 2024 |
| e₹ in circulation | ₹1,016.5 crore (March 2025); ₹771.7 crore (March 2026); ₹1,140.26 crore (9 October 2026) |
| Flagship use case | CBDC-based PDS, launched 15 February 2026 in Gujarat |
| Fully launched retail CBDCs | Bahamas, Jamaica, Nigeria |
Exam corner: what to remember
- The e₹ is a bank note in digital form: Section 2(aiv), inserted by the Finance Act, 2022. Section 22A exempts it from Sections 24, 25, 27, 28 and 39.
- Concept Note: 7 October 2022. e₹-W: 1 November 2022 (G-sec settlement, 9 banks). e₹-R: 1 December 2022 (Mumbai, New Delhi, Bengaluru, Bhubaneswar).
- Design: two-tier, token-based retail, non-interest-bearing, with "reasonable anonymity" for small payments.
- 8 February 2024: programmability and offline. 5 April 2024: non-bank wallets.
- Programmable e₹ can be limited by expiry date, geo-location, merchant category code or merchant VPA.
- PDS on CBDC: launched 15 February 2026, Gandhinagar; Ahmedabad, Anand, Valsad, Surat; extended to Puducherry and Chandigarh.
- Circulation: ₹1,016.5 crore → ₹771.7 crore (−24.1%) between March 2025 and March 2026; ₹1,140.26 crore on 9 October 2026.
- 19 banks offer e₹ wallets; 16 participants in e₹-W.
- Global: e-CNY (biggest pilot), digital euro (pilot 2027, issuance possibly 2029), US executive order of 23 January 2025 bars agencies from creating or promoting a CBDC. Launched: Bahamas, Jamaica, Nigeria.
- BIS: mBridge (BIS left in October 2024), Agorá (tokenised wholesale), Nexus (fast payment systems; India a founder of Nexus Global Payments).
For exam-specific syllabus and pattern details, see our pages for RBI Grade B, SBI PO and IBPS PO.
Test yourself
Which amendment brought the digital rupee within the definition of "bank note" in the RBI Act?
Show answer
Answer: (a) Section 125 of the Finance Act, 2022 inserted Section 2(aiv), defining a bank note as one issued "whether in physical or digital form", along with Section 22A.
The pilot of wholesale digital rupee (e₹-W) began on:
Show answer
Answer: (b) e₹-W began on 1 November 2022 for settling secondary market trades in government securities; e₹-R followed on 1 December 2022.
Which of the following is NOT a feature of India's retail e₹?
Show answer
Answer: (c) Like cash, the e₹ earns no interest. This is a deliberate design choice to limit the shift of deposits out of banks.
Under Section 22A of the RBI Act, which of these provisions does NOT apply to bank notes in digital form?
Show answer
Answer: (c) Section 22A disapplies Sections 24, 25, 27, 28 and 39. Sections 22 and 26 still apply, which is why the e₹ is legal tender.
The RBI's Concept Note preferred which form of CBDC for the retail segment?
Show answer
Answer: (b) The Note viewed a token-based CBDC as the preferred mode for retail "as it would be closer to physical cash"; account-based was considered for wholesale.
Retail e₹ in circulation was ₹1,016.50 crore at end-March 2025 and ₹771.66 crore at end-March 2026. The fall is closest to:
Show answer
Answer: (b) (1,016.50 − 771.66) ÷ 1,016.50 = 244.84 ÷ 1,016.50 = 24.1%. Option (c) wrongly divides by the lower figure.
A user with only a ₹50 e₹ token buys an item for ₹32. What happens?
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Answer: (c) All e₹ wallets make change automatically: the user enters the amount and the balance stays in the wallet.
In February 2026, the first CBDC-based Public Distribution System pilot was launched in which state?
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Answer: (c) It was launched on 15 February 2026 in Gandhinagar and covered Ahmedabad, Anand, Valsad and Surat. Food subsidies are paid as programmable e₹ redeemable at fair price shops.
According to the RBI's e₹ FAQ updated on 1 October 2026, how many banks offer retail e₹ wallets?
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Answer: (d) 19 banks offer e₹ wallets. 16 is the number of participants in the wholesale pilot.
Which BIS project connects countries' fast payment systems rather than CBDCs, and has India as a founder of its operating company?
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Answer: (b) Project Nexus links instant payment systems such as UPI. In 2025 the RBI and five ASEAN central banks set up Nexus Global Payments.
Further reading
- RBI, Concept Note on Central Bank Digital Currency (October 2022): the RBI's own case for the e₹, with design choices, risks and the legal changes. Read Chapters 3 and 4 at least.
- RBI, Digital Rupee (e₹) FAQs, updated 1 October 2026: the latest official list of features, wallet banks, programmability and wholesale use cases in plain language.
- RBI Annual Report 2025-26, Chapter VI (FinTech Department): what the RBI did with CBDC in 2025-26 and its goals for 2026-27.
- RBI, Handbook of Statistics, Table 152: eRupee in Circulation: year-end e₹ data by denomination, retail and wholesale, since 2022-23.
- ECB, Digital euro: the most detailed public plan for a CBDC in an advanced economy, with the timeline to 2029.
- Atlantic Council, Central Bank Digital Currency Tracker: a regularly updated map of every country's CBDC status.
- BIS Innovation Hub, Project Agorá: how tokenised central bank and commercial bank money might work together across borders.
Sources
- RBI, Digital Rupee (e₹) FAQs, updated 1 October 2026: definition, legal tender under s. 26, RBI liability, 24x7 load and redeem, no minimum balance or fees, no interest, change-making example, two-decimal payments, UPI QR scanning and settlement, offline under exploration, onboarding via mobile/Aadhaar for DBT users, 19 wallet banks, programmability parameters, 16 e₹-W participants and four use cases, CAT Sandbox (accessed 24 October 2026)
- RBI Act, 1934 (RBI publication): Sections 2(aiv) and 22A inserted by the Finance Act, 2022 (Act 6 of 2022), section 125; text of Sections 22, 24, 25, 26, 27, 28 and 39 (accessed 24 October 2026)
- RBI press release, Issuance of Concept Note on CBDC, 7 October 2022: release date and purpose of the Concept Note (accessed 24 October 2026)
- RBI, Concept Note on Central Bank Digital Currency: definition of CBDC, motivations, offline, design choices, token vs account, two-tier model, non-remuneration, anonymity, disintermediation and holding limits, internal Working Group of October 2020 (accessed 24 October 2026)
- RBI press release, Operationalisation of e₹-W Pilot, 31 October 2022: e₹-W from 1 November 2022, G-sec settlement use case, nine banks (accessed 24 October 2026)
- RBI press release, Operationalisation of e₹-R Pilot, 29 November 2022: e₹-R from 1 December 2022, token design, denominations, no interest, eight banks, four plus nine cities (accessed 24 October 2026)
- RBI, Statement on Developmental and Regulatory Policies, 8 February 2024: programmability and offline functionality in the CBDC-R pilot (accessed 24 October 2026)
- RBI, Statement on Developmental and Regulatory Policies, 5 April 2024: non-bank payment system operators to offer CBDC wallets (accessed 24 October 2026)
- RBI Annual Report 2025-26, Chapter VI: user-level programmability, BHIM discovery of CBDC wallets, DBT pilots, NFC and SMS offline tests, expanded wholesale pilots, CAT Sandbox and UMI announced at GFF 2025, tokenised CDs, HaRBInger 2025, goals for 2026-27 (accessed 24 October 2026)
- RBI Annual Report 2025-26, Chapter VIII: e₹ in circulation ₹771.7 crore on 31 March 2026 against ₹1,016.5 crore a year earlier (accessed 24 October 2026)
- RBI Annual Report 2025-26, Chapter X: CBDC DBT payments through e-Kuber with the RBI as sponsor bank (accessed 24 October 2026)
- RBI, Handbook of Statistics, Table 152: retail and wholesale e₹ by denomination, end-March 2023 to 2026 (accessed 24 October 2026)
- RBI, Currency in Circulation, week ended 9 October 2026: e₹ ₹1,140.26 crore by denomination; banknotes ₹42,90,114 crore and coins ₹42,868 crore (accessed 24 October 2026)
- Outlook Money, 31 May 2026: Annual Report 2025-26 on DBT pilots, MAS MoU, UAE talks and 2026-27 plans (accessed 24 October 2026)
- Business Upturn, 29 May 2026: PDS pilots in Gujarat, Puducherry and Chandigarh; Projects Rialto and Mandala Phase 2 (accessed 24 October 2026)
- All India Radio News, 15 February 2026: launch of the CBDC-based PDS by Amit Shah (accessed 24 October 2026)
- Manorama Yearbook, 16 February 2026: districts covered, QR redemption at fair price shops, real-time dealer margins, planned extension to UTs (accessed 24 October 2026)
- CoinDesk, 24 April 2026: Reuters report of about 10 welfare pilots and 10 million users; December 2023 salary credits and one million daily transactions; BRICS CBDC proposal (accessed 24 October 2026)
- Atlantic Council, CBDC Tracker (May 2026): 146 countries exploring, 77 advanced, three launched, e-CNY statistics and January 2026 reclassification, US stance (accessed 24 October 2026)
- ECB, Digital euro: October 2025 decision, 2027 pilot, possible 2029 issuance, September 2026 merchant call (accessed 24 October 2026)
- ECB, Digital euro FAQs: holding limit, hypothetical limits up to €3,000, no remuneration, offline privacy (accessed 24 October 2026)
- European Commission, Digital euro package: proposal of 28 June 2023 (accessed 24 October 2026)
- The White House, Executive Order of 23 January 2025: prohibition on agencies establishing, issuing or promoting CBDCs (accessed 24 October 2026)
- BIS, Project mBridge: partners, observers including the RBI, MVP in 2024, BIS exit in October 2024 (accessed 24 October 2026)
- BIS, Project Agorá: participants, unified ledger design, report of 27 May 2026 (accessed 24 October 2026)
- BIS, Project Nexus: fast payment system links; Nexus Global Payments set up in 2025 by six central banks including India (accessed 24 October 2026)
- Wikipedia, Digital renminbi: e-CNY testing from April 2020 in four cities (accessed 24 October 2026)
- Wikipedia, Digital rupee: Budget 2022 announcement, e-RUPI launch on 2 August 2021 (accessed 24 October 2026)
- PIB, Ministry of Finance, 20 July 2026: UPI transactions of 24,161.69 crore in 2025-26 (accessed 24 October 2026)