Reserve Bank of India to expand digital rupee use cases to include offline payments and smart subsidies

The Reserve Bank of India (RBI) is accelerating its digital rupee (e₹) initiative, unveiling ambitious new digital rupee use cases that could redefine financial transactions in the world’s fastest-growing economy. With features like programmability and offline capabilities, India’s central bank digital currency (CBDC) is poised to boost financial inclusion, streamline subsidies, and revolutionize corporate payments.

According to the RBI’s Annual Report 2024–25, the e₹-Retail pilot has already onboarded 600,000 users across 17 banks, while the e₹-Wholesale pilot is gaining traction in interbank markets. Now, the RBI is pushing further, introducing non-bank wallet providers and expanding testing to standalone primary dealers (SPDs).

“The digital rupee’s programmability opens doors for targeted welfare spending, while offline functionality ensures accessibility in rural India,” says Dr. Rajesh Kumar, Senior Economist at the National Institute of Public Finance and Policy (NIPFP). “This could be a game-changer for financial inclusion.”

5 Key digital rupee use cases driving adoption

1. Government Subsidies & Welfare: Precision Delivery with Programmability

One of the most impactful digital rupee use cases is targeted subsidy distribution. The RBI’s programmable CBDC can restrict spending to essential goods, ensuring subsidies for food, fuel, or farming aid aren’t misused.

“Programmable money means leak-proof welfare,” explains Priya Sharma, Fintech Analyst at Ernst & Young India. “If a subsidy is meant for fertilizers, the digital rupee can be coded to only work at agricultural suppliers.”

2. Offline Payments: Banking the Unbanked

With 40% of India’s rural population still lacking reliable internet, offline digital rupee use cases are critical. The RBI’s new feature allows transactions via SMS or NFC-enabled devices, bridging the digital divide.

3. Corporate Treasury & Smart Contracts

Businesses stand to gain from automated payrolls, escrow services, and spending controls via the e₹-Wholesale pilot. “Imagine a company allocating funds for travel, the digital rupee can be programmed to only pay airlines or hotels,” notes Karan Mehta, CFO of a Mumbai-based logistics firm.

4. Cross-Border Trade & Interbank Settlements

The digital rupee use cases extend beyond retail, wholesale CBDCs are cutting settlement times from days to minutes. The RBI’s report highlights growing institutional adoption, with four new primary dealers joining the pilot.

5. Integration with UPI for Global Dominance

India’s Unified Payments Interface (UPI) already handles 48.5% of global real-time transactions. Merging UPI with the digital rupee could create a seamless, low-cost alternative to SWIFT for remittances.

Challenges & the Road Ahead

Despite progress, hurdles remain. Supreme Court Justice Surya Kant recently warned of crypto’s “parallel economy” risks, urging faster CBDC adoption to counter private digital assets. Meanwhile, India’s 30% crypto tax has pushed traders toward regulated alternatives, like the digital rupee.

“The key is balancing innovation with stability,” says Dr. Kumar. “If the RBI nails these digital rupee use cases, India could lead the next wave of financial digitization.”

With 100 million+ crypto users in India, the race is on. Will the digital rupee become the preferred digital currency? The next 12 months will decide.