The Reserve Bank of India’s (RBI) ambitious digital rupee pilot, designed to transition India into the age of digital currency, has hit significant roadblocks. Daily transactions have plunged from a high of one million to about 100,000, revealing a stark disconnect in bank adoption and public enthusiasm. As the RBI rolls out new initiatives to coax usage, the question remains: will India’s digital currency ever gain widespread traction?
Transaction Slump and Adoption Barriers
Since peaking at one million daily retail transactions in December 2023, the volume of exchanges using the e-rupee has slumped precipitously. Motivated by incentives to boost transactions, banks initially pushed for higher engagement, but the momentum quickly waned when such incentives dwindled. Current figures hover around 100,000 transactions per day, highlighting weak organic demand for the digital currency. “There is little organic demand to use the e-rupee,” commented a banker involved in the pilot, underlining the uphill battle the RBI faces in fostering everyday consumer acceptance.
This situation is not unique to India; several countries introducing Central Bank Digital Currencies (CBDCs), like the Bahamas and Jamaica, report similar struggles. These economies also demonstrate that consumers might require more than technological novelty to embrace digital currencies. “We have observed that to spur adoption, consumers may need more than just retail CBDC technology. They may need the CBDC to add value relative to cash,” noted the Federal Reserve Bank of Kansas City, reflecting a sentiment echoed by many market analysts.
Pilot Programs and Initial Milestones
Launched in December 2022, RBI’s digital rupee pilot initially attracted attention with rapid growth, achieving daily transaction goals through bank-led initiatives that included disbursement of salaries. However, without continuous structural incentives, that progress has flatlined. By late 2024, e-rupee usage comprised a mere 0.006% of all banknotes in circulation, indicating significant barriers to acceptance and integration into traditional banking frameworks.
To counter these challenges, the RBI initiated a retail sandbox in October 2025, enabling fintech firms to innovate in the CBDC space. According to Suvendu Pati, chief general manager at the RBI, “The Reserve Bank of India on Wednesday launched a retail sandbox for its central bank digital currency (CBDC), allowing fintech firms to build and test solutions as part of the ongoing pilot.” Currently, approximately 7 million users are involved in this expanded testing phase, underscoring the RBI’s commitment to gradually refining its approach.
Technology and Infrastructure Challenges
Despite these initiatives, significant technological hurdles remain. The e-rupee settlement process is described as sluggish, lacking the robust infrastructure necessary for large-scale financial transactions. Most private sector banks show reluctance to engage in government securities and call money markets using the CBDC, which stymies efforts for integration into broader banking operations.
The Clearing Corporation of India plays a pivotal role in facilitating this infrastructure, processing transactions one-by-one, which hampers efficiency. Commercial banks are still prioritizing the development of their own systems for CBDC trading, leaving a significant gap in operational capabilities necessary for tackling high-volume trading scenarios.
Initiatives to Enhance Accessibility
In a bid to increase accessibility, the RBI has signaled its intention to incorporate non-bank payment operators such as PhonePe and Google Pay into the CBDC equation. This move aims to diversify the user base by expanding entry points for the e-rupee, potentially lifting daily transaction volumes considerably. Observers remain hopeful, with one source asserting, “Adoption should grow as more use cases develop,” suggesting a dynamic future for the digital currency.
Moreover, innovative features such as programmability for targeted payments have been introduced, allowing for more customized uses of the currency. In October 2025, a pilot was launched to tokenize certificates of deposit, showcasing the CBDC’s potential to streamline transactions and enhance security in financial dealings. As Suvendu Pati emphasized, “risks in asset tokenization are manageable and can be addressed through regulatory guardrails,” indicating a structured pathway to mitigate potential pitfalls associated with digital asset management.
Charting a Course for the Future
The RBI’s approach to the e-rupee is cautiously optimistic, suggesting that large-scale adoption of this digital currency will require concerted effort over the next two to three years. Rather than rushing ahead, the RBI is concentrating on thorough technology testing and expanding feasible use cases. This strategic pause allows for learning and adaptation before a broader rollout.
As there remains a long road ahead for the e-rupee, the RBI’s measured pace could be the key to fostering user confidence and ensuring a more sustainable adoption trajectory. With ongoing enhancements and evolving market dynamics, the future of India’s digital rupee may yet transform, creating a new chapter in the intersection of technology and finance.
