Thomas Daniels
The Reserve Bank of India (RBI) is intensifying its efforts to enhance the digital rupee (e₹), focusing on cross-border applications and new functionalities, as detailed in its Annual Report for FY2024–25. This strategic pivot aims to bolster the e₹’s role in international settlements, despite current challenges in domestic adoption.
Cross-Border Expansion and Strategic Initiatives
The RBI is exploring both bilateral and multilateral frameworks to facilitate cross-border transactions using the digital rupee. This initiative aligns with global trends, where central banks are evaluating the potential of Central Bank Digital Currencies (CBDCs) to streamline international payments. The RBI’s participation in multilateral collaborations underscores its commitment to integrating the e₹ into the global financial ecosystem.
Domestic Adoption: Growth Amidst Challenges
Domestically, the e₹ has seen a significant increase in circulation value, rising 334% year-on-year to ₹1,016.5 crore ($122.1 million) as of March 2025. This growth is primarily attributed to targeted initiatives such as disbursing employee benefits through e₹ wallets and incentivizing transactions. However, organic adoption remains limited. After achieving a peak of 1 million daily transactions in December 2023, usage has declined to approximately 100,000 daily transactions, indicating challenges in sustaining user engagement without ongoing incentives.
Integration with Digital Payment Platforms
To enhance accessibility and user experience, the RBI has facilitated the integration of the e₹ with existing digital payment infrastructures. Notably, fintech platforms have launched e₹ wallets compatible with the Unified Payments Interface (UPI), allowing users to transact seamlessly using existing QR codes. This interoperability is crucial for promoting widespread adoption by leveraging the familiarity and convenience of established payment systems.
Future Outlook
The RBI’s strategic focus on cross-border applications and integration with existing payment platforms reflects a comprehensive approach to enhancing the utility and adoption of the digital rupee. While domestic uptake faces hurdles, these initiatives position the e₹ as a potential instrument for international trade and settlements, aligning with India’s broader objectives of financial innovation and inclusion.
