Reserve Bank of India to roll out new use cases for digital rupee

India’s Reserve Bank (RBI) is expanding its digital rupee (e₹) pilot program. The 2024-25 Annual Report details plans to enhance both retail and wholesale e₹ functionalities. Key improvements include exploring programmability and offline capabilities, addressing limitations in areas with poor internet connectivity. This will allow for targeted payments, such as government subsidies or corporate spending controls.

Currently, pilot programs are underway. The retail e₹ pilot involves 600,000 users across 17 banks, with non-bank participation now permitted for wallet services. The wholesale e₹ pilot, focused on the interbank market, has also expanded, incorporating four additional standalone primary dealers.

India’s digital payment landscape is thriving. The 2024-25 fiscal year saw a 34.8% surge in digital payment volume and a 17.9% increase in value. The Unified Payments Interface (UPI) solidified India’s global leadership in real-time payments, commanding a 48.5% share by volume. Innovative features like “Delegated Payments,” allowing authorized secondary users to transact within specified limits from a primary user’s account, are expanding access.

However, regulatory concerns persist. India’s Supreme Court recently criticized the government’s slow response to regulating cryptocurrencies despite the 30% tax imposed since April 2022. Justice Surya Kant highlighted the potential threat of a “parallel economy” fueled by unregulated digital assets to the nation’s financial system. Despite this, India boasts an estimated 100 million cryptocurrency holders amidst ongoing regulatory scrutiny of crypto firms. The RBI’s expansion of the e₹ pilot program suggests a proactive approach to managing digital currencies within the Indian financial system, aiming to balance innovation with regulatory oversight.