What do you mean by Digital Rupee ? In this context, explain the working and progress of India’s Central Bank Digital Currency (CBDC). (Answer in 150 words)

- What do you mean by Digital Rupee ? In this context, explain the working and progress of India’s Central Bank Digital Currency (CBDC). (Answer in 150 words)
Introduction
The Digital Rupee (e₹) is India’s Central Bank Digital Currency (CBDC)—a digital form of sovereign currency issued by the RBI, having the same legal-tender status as physical rupees.
Body
Working:
1. Retail CBDC (e₹-R): Individuals hold e₹ in digital wallets provided by participating banks/non-banks and use it for person-to-person and person-to-merchant payments.
2. It can be transferred by scanning CBDC or interoperable UPI QR codes and converted between bank deposits and digital rupees.
3. Wholesale CBDC (e₹-W): Used by financial institutions for settlement of government securities and inter-bank transactions, reducing settlement risk.
Progress:
1. Wholesale and retail pilots began in November and December 2022, respectively.
2. By March 2025, e₹-R covered 17 banks and around 60 lakh users, with circulation reaching about ₹1,016 crore.
3. RBI is testing offline payments, programmability, DBTs and cross-border CBDC transactions.
Conclusion
Thus, the Digital Rupee seeks to combine the trust of cash with digital efficiency, while supporting financial inclusion and future-ready payment systems.