India's digital rupee struggles with retail but shines in wholesale

Its programmability can be used in disbursing credit and government securities settlements.

India’s central bank digital currency (CBDC), the digital rupee, struggles to gain wider retail appeal but carries embedded money importance for loan and government disbursements.

Digital rupee adoption is negligible if compared against transaction volumes of the Unified Payments Interface (UPI), the instant mobile payment system of India, said Geeta Chugh, credit analyst for S&P Global Ratings.

Chugh, however, noted the digital rupee’s programmability and settlement efficiency. This can be an advantage for disbursing agricultural credit, carbon credit disbursement and government securities settlement.

“This reflects its actual value proposition as a programmable settlement layer, with banks, rather than consumers, positioned as the primary beneficiaries,” she said in a commentary on 1 October 2026.

The largest economic benefit of the CBDC could come from wholesale applications, including tokenized securities settlement and cross-border payments, Chugh said.

“The digital rupee could become the fourth layer of India's digital public infrastructure, encompassing digital identity, payments and account aggregators by embedding rules directly into money,” Chugh said.

In a tokenised economy, the digital rupee could keep cross-border trade and remittances anchored in the rupee and prevent its shift towards foreign-currency stablecoins.