The Reserve Bank of India (RBI) is taking new steps to expand the utility of the digital rupee by introducing cross-border use cases in the next phase of its central bank digital currency (CBDC) development.
The central bank announced its intention to roll out international functionalities for the digital rupee in its 2024–25 annual report.
This signals a shift from limited domestic pilots to potential bilateral and multilateral collaborations with global partners.
The initiative could see India follow in the footsteps of countries like China and Singapore, which are already testing CBDCs for cross-border payments.
Cross-border testing planned in next phase of development
According to the RBI’s report, the upcoming phase will focus on testing the digital rupee for international transactions and enhancing its functionality.
While the report does not name specific countries involved in these pilots, it states that the RBI is exploring both bilateral and multilateral arrangements.
This development builds on previous experiments, which began with a wholesale CBDC pilot in November 2022 and expanded to retail use in December 2022.
The move aligns with broader global interest in cross-border CBDC interoperability, including projects like mBridge led by the Bank for International Settlements.
If successful, India’s digital rupee could become a tool for international trade settlement, especially in rupee-linked corridors, and reduce dependence on the dollar for cross-border settlements.
Circulation value rises over ₹1,000 crore in FY25
Despite mixed user adoption, the value of the digital rupee in circulation has increased substantially.
The RBI reported that the CBDC’s total circulation stood at ₹1,016.46 crore ($122.1 million) at the end of FY25, compared to ₹234.04 crore ($28.1 million) a year earlier.
This represents a 334% year-on-year increase, suggesting growing institutional participation, particularly in the wholesale segment.
However, most of the adoption appears to have been driven by top-down measures. Public-sector banks issued e-rupee incentives and used it to disburse a portion of employee salaries.
These efforts helped push retail transaction volumes past 1 million by late June 2025. Even so, this figure remains far below the RBI’s earlier target of 1 million transactions per day by the end of 2023.
Retail uptake lags despite incentives
The RBI’s push to scale retail adoption through incentives and salary disbursements highlights the challenges of shifting consumer behaviour.
The slow pace of uptake indicates that, despite infrastructure and regulatory readiness, usage has not become organic among end users.
The earlier push for banks to ramp up retail transactions has reportedly subsided, reflecting a more cautious stance from the RBI regarding aggressive scaling before product-market fit is achieved.
This pause may offer the RBI a chance to recalibrate its strategy by focusing on cross-border efficiencies rather than domestic mass adoption.
The digital rupee’s limited success in retail payments contrasts with the RBI’s long-standing leadership in real-time payment innovation through platforms like UPI.
India eyes strategic positioning in global CBDC race
By signalling interest in international pilots, the RBI is aligning its CBDC roadmap with emerging global priorities.
Cross-border CBDCs could help reduce settlement costs, boost trade efficiency, and offer alternatives to dollar-dominated transactions in regional markets.
India’s efforts could also align with its broader trade goals, including the promotion of rupee-settled trade with countries like Russia, Sri Lanka, and the UAE.
A digital rupee integrated into such frameworks may serve as a vehicle for seamless cross-border transactions while retaining full regulatory oversight.
While technical and geopolitical hurdles remain, the shift in focus from domestic scale to international experimentation could prove a more pragmatic and strategic path for India’s CBDC journey.
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