India Accelerates Digital-Rupee Push as Reserve Bank of India Rolls Out Offline Wallet Pilot and Tokenisation Sandbox

Background: What is the e₹ and Why It Matters

The digital rupee, or e₹, is the digital form of the Indian rupee issued by the RBI. It aims to provide the convenience of cash combined with the efficiency of digital payments, operating via wallets issued by banks or regulated non-banks.

Launched in pilot mode in December 2022 for retail users and November 2022 for wholesale use, the e₹ has been the focus of India’s broader ambition to modernise financial infrastructure, increase payments efficiency and enhance financial-inclusion across remote and low-connectivity areas. 

While e-payments via UPI and other rails are mature in India, a CBDC potentially provides advantages such as offline use, direct settlement with the central bank, programmable money (e.g., for subsidies) and new possibilities for tokenising assets. But rollout at scale requires careful balancing of privacy, cybersecurity, interoperability and adoption risks.

Major Recent Developments

Three key moves by the RBI in recent weeks signal a faster pace of action:

1. Offline Wallet Feature for e₹

The RBI has released details indicating that the e₹ wallet now supports offline transactions — enabling payments even when internet connectivity is weak or absent.

This function is crucial in India’s rural or remote regions where mobile connectivity falters. Using near-field communication (NFC) or minimal telecom signalling, the wallet allows peer-to-peer or peer-to-merchant payments without a fully online network. This gives the e₹ a cash-like resilience even in adverse connectivity zones.

Because one of the criticisms of digital-only currency systems is their dependence on infrastructure, the offline feature strengthens the e₹’s value proposition in a diverse connectivity landscape such as India’s.

2. Tokenisation Sandbox for Certificates of Deposit

The RBI announced a pilot initiative to tokenize certificates of deposit (CDs) using the wholesale segment of the e₹ infrastructure. 

Tokenisation refers to converting real-world financial assets (like deposits, bonds or commercial paper) into digital tokens recorded on a blockchain or distributed ledger. This can speed up settlement, reduce counterparty risk, and enable innovation in financial markets.

By leveraging the e₹-wholesale layer, the RBI is experimenting with how CBDC infrastructure can undergird more than just payments—potentially bringing new efficiencies to money-markets, collateral flows and retail-wholesale differentiation.

3. Stronger Regulatory Stance on Cryptocurrencies, Support for CBDC Innovation

In a recent address, RBI Governor Sanjay Malhotra reiterated that cryptocurrencies and stable-coins pose “huge risk” and affirmed that India’s payment rails are already robust.

The message is clear: while decentralized digital assets remain in the caution zone, the RBI is doubling down on its own digital-currency route. It emphasises innovation under its supervision rather than allowing unregulated systems to proliferate.

Why These Moves Matter: Implications and Opportunities

The recent developments around the e₹ programme carry significant implications across sectors.

Financial Inclusion & Payment Efficiency

The offline-enabled e₹ wallet opens possibilities for rural merchants, informal economy workers and micro-transactions in low-connectivity settings. It could function as a digital cash substitute, bridging gaps where mobile data is patchy.

Moreover, programmable money features—already under trial—could help the government deliver targeted subsidies, welfare cash transfers, conditional benefits or vouchers with built-in rules for use. This potentially reduces leakages and enhances accountability in benefit delivery. 

Financial-Markets Innovation & Tokenisation

By launching tokenisation pilots, the RBI is exploring how real-world assets can be digitised and settled through CBDC rails. This could reduce friction, speed up settlement, enable 24×7 markets and broaden access for retail investors. It also positions India to compete in global developments in tokenised finance.

In future, this could spur new fintech business models—from digital-asset custodians to tokenised debt platforms—and increase India’s financial-market depth.

Crossover with Digital Public Infrastructure

India’s digital public infrastructure (DPI) stack—covering Aadhaar, UPI, eKYC, account-aggregation and more—is already one of the most advanced globally. The e₹ builds atop this stack, potentially creating a unified digital money ecosystem combining identity, payments and programmable money.

If executed well, this could reinforce India’s soft-power in fintech exports, open new cross-border flows and provide templates for other advanced economies exploring CBDCs.

Risks, Challenges and Open Questions

Despite momentum, several hurdles remain before the e₹ can scale successfully.

• Adoption challenge: Recent data shows uptake is still modest relative to India’s payment volumes—users and merchants must transition willingly for scale.
• Privacy & cybersecurity: While offline wallets offer resilience, ensuring secure transactions without compromising user privacy or creating vulnerability is tricky.
• Interoperability: The e₹ must integrate seamlessly with existing UPI payments, bank accounts, QR codes and merchant systems. If the wallet ecosystem becomes isolated, adoption could falter.
• Regulatory clarity: Tokenisation, programmable money, cross-border uses and CBDC legal frameworks all raise complex regulatory issues. Missteps could undermine trust.
• Financial-system impact: As the central bank expands digital currency use, banks and intermediaries may need to adjust business models, flows and settlement systems—requiring coordination and change management.

What to Watch: Milestones for the Next 12 Months

Several indicators will determine how quickly and smoothly the e₹ transition proceeds:

• Expansion of wallet-issuer banks and non-bank fintech firms onboarding e₹ users;
• Number of merchants enabled for offline‐e₹ payments in rural and semi‐urban areas;
• Progress of tokenisation pilots—particularly certificates of deposit and other asset classes;
• Any cross-border CBDC pilots announced by RBI, particularly with partner central banks;
• Changes in regulation covering programmable features, privacy safeguards and fintech participation;
• User-adoption metrics: value of e₹ transactions, active wallets, offline usage rates;
• Integration with existing payment infrastructure (UPI link-ups, bank integration, merchant QR compatibility).

Conclusion: A Calculated Shift Toward Digital Sovereign Money

By accelerating capabilities such as offline payments, asset tokenisation and controlled innovation, the RBI is signalling that India expects to move from pilot to scale mode in its digital-rupee journey.

This is not simply about replacing cash—it is about embedding digital money into a larger digital-infrastructure ecosystem, rethinking payments, financial-markets access, inclusion and regulatory control.

For India, the digital-rupee move has strategic implications: strengthening fintech leadership, building sovereign-money infrastructure, reducing reliance on legacy paper currencies and setting the stage for future innovations in digital assets.

But vision alone will not suffice. The RBI and Indian ecosystem must deliver on adoption, usability, interoperability and trust. If they succeed, the e₹ could become a cornerstone of the next-generation Indian financial system. If not, the ambition may remain pilot-led—and opportunity deferred.