UPSC CURRENT AFFAIRS – 30th May 2025
e-Rupee Circulation and Cross-Border CBDC
Why in News?
The Reserve Bank of India’s e-Rupee (CBDC) in circulation surged to ₹1,016 crore by March 2025.
Introduction
- India’s Central Bank Digital Currency (CBDC), known as the e-Rupee, has seen a significant rise in circulation, reaching ₹1,016 crore by the end of March 2025, up from ₹234 crore a year earlier.
- Introduced as a response to the challenges posed by private virtual currencies like Bitcoin, the CBDC aims to modernize India’s monetary system, enhance financial inclusion, and simplify payments — both domestic and cross-border.
What is e-Rupee?
The e-Rupee is a digital form of fiat currency issued by the Reserve Bank of India (RBI). It is a liability of the central bank and is recognized as legal tender. There are two types of e-Rupee pilots:
- e-Rupee-Wholesale (CBDC-W): Primarily used for interbank settlements and financial transactions.
- e-Rupee-Retail (CBDC-R): Designed for use by the public in day-to-day transactions.
Current Status and Growth
As per the RBI Annual Report 2024-25, the e-Rupee’s circulation has surged:
- Total e-Rupee in circulation: ₹1,016 crore
- ₹500 denomination: ₹857 crore
- ₹200 denomination: ₹91 crore
- ₹100 denomination: ₹38 crore
This growth reflects increased participation and experimentation across both wholesale and retail segments.
Retail Pilot Expansion
Key Developments:
- e-Rupee-Retail has expanded to 17 banks.
- Over 60 lakh users have adopted the e-Rupee.
- Non-bank entities have been permitted to distribute CBDC wallets, increasing accessibility.
New Features Introduced:
- Offline Payments: Useful in remote areas with poor connectivity.
- Programmability: Enables funds to be used for specific purposes only.
Innovative Use Cases of Programmability
Programmable CBDC has opened up targeted and efficient use of government funds:
- Direct Benefit Transfers (DBT) linked to carbon credits and Kisan Credit Card (KCC) loans.
- Employee Allowances (fuel/meal) are being disbursed digitally.
- The Odisha Government transferred e-Rupee to 88,000 beneficiaries under the Subhadra Yojana.
These use cases demonstrate how the e-Rupee can enhance transparency and traceability in public welfare schemes.
Cross-Border Ambitions of CBDC
One of the major goals of CBDC globally is to streamline cross-border payments, which are currently expensive, slow, and opaque.
RBI’s Cross-Border Initiatives:
- Bilateral Pilots: Being actively explored with select countries to improve turnaround time, efficiency, and transparency.
- Multilateral Engagements: Participation under the Bank for International Settlements (BIS) Innovation Hub is being considered.
- Roadmap Finalization: Progress has been made in identifying technical requirements and defining use cases for cross-border pilots.
Technological Enhancements
- The Account Aggregator Framework is being improved for better integration with CBDC for customer convenience, data transparency, and financial efficiency.
- Efforts are on to ensure interoperability between banks, wallets, and payment platforms.
Challenges and Considerations
While the e-Rupee holds immense potential, several issues require close attention:
- Cybersecurity and data privacy.
- Digital divide: Ensuring adoption in rural and low-income segments.
- Regulatory framework for programmable features.
- Cross-border legal harmonization.
Conclusion
- The e-Rupee marks a bold step in India’s financial digitization journey. With increasing circulation, innovative domestic use cases, and upcoming cross-border pilots, the RBI is shaping the future of money and payment infrastructure.
- As the e-Rupee evolves, it promises to enhance efficiency, support welfare delivery, and position India as a leader in the global CBDC ecosystem.
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