[8] The implementation of the Digital Rupee aims to remove the security printing cost borne by the general public, businesses, banks, and RBI on physical currency which amounted to ₹49,848,000,000.

[14] On 29 January 2021, the Indian Government proposed a bill to ban trading and investments in cryptocurrencies while giving legal power to RBI for developing CBDC, termed as "programmable digital rupee" using the experience gained from handling Unified Payments Interface (UPI), Immediate Payment Service (IMPS) and Real-time gross settlement (RTGS) for distribution and validation purpose.

[15][16] As per the Currency and Finance Report of 2021 released by RBI, CBDC backed by the sovereign must promote non-anonymity of monetary transactions and financial inclusion by direct transfers.

[20] While the preliminary study will be conducted soon, RBI started internal evaluation on scope, legal framework, calibration, technology, distribution and validation mechanism of CBDC citing increase in digital transaction during the COVID-19 pandemic.

[25][26] The Department of Financial Services, Ministry of Health and Family Welfare and National Health Authority introduced e-RUPI on 2 August 2021 which is a prepaid person specific, purpose specific e-voucher based on QR code or SMS string that doesn't require bank account to make it leak proof.

[29] As per the International Monetary Fund, the Digital Rupee can help in currency management and cross border payments in view of high volume of inbound remittance.

[30][31] The pilot in wholesale segment, known as the Digital Rupee -Wholesale (e₹-W), was launched on 1 November 2022, with use case being limited to the settlement of secondary market transactions in government securities.

The pilot in retail segment, known as digital Rupee-Retail (e₹-R), was launched on 1 December 2022, within a closed user group (CUG) comprising participating customers and merchants.

RBI is also exploring purpose driven CBDC for Direct Benefit Transfer (DBT) to reduce subsidy leakage and corruption.

[34][35] Through the LF Decentralized Trust, the RBI and the MEITy are utilizing Linux Foundation's projects to build the National Blockchain Framework and Digital Rupee.

[38] On 5 October 2022 the Fintech Department of RBI released a concept note to create awareness on CBDC and the planned features of upcoming Digital Rupee (e₹).

The objective behind CBDC is to support and encourage the growing digital economy, reduce cost of physical cash management, create an efficient monetary payment system and further increase financial inclusion.

Digital Rupee is convertible to paper currency without change in value and will show in RBI balance sheet to build trust, safety, liquidity, settlement finality and integrity.

[43] RBI is thinking about adding an offline usage capability to the digital rupee to offer availability and resilience in the event of a network outage or programmability issues.

Without requiring a check-in with an online ledger, the offline digital payment systems could validate transactions and confirm the existence of funds.

Numerous offline methods, both proximity- and non-proximity-based, will be assessed in mountainous, rural, and urban settings in order to accomplish this goal.

[59] In the retail sector usage of the Digital Rupee, the RBI has achieved its goal of one million daily transactions on 27 December 2023.

[61] In order to assess the durability of the system at scale, the RBI set a goal of one million retail transactions every day for the digital rupee that was met by December 2023.

However, the central bank later announced that payment companies could also offer digital rupee transactions using their platform after receiving RBI approval.

Without the need for a separate on-boarding procedure for CBDC for retailers, it will enable users to scan the existing UPI QR code and make payments using digital rupee.

[66] As part of the CBDC pilot project, Bank of Baroda have announced the addition of a UPI interoperability feature to their Digital Rupee application.

[67] The RBI Internal Working Group is looking for the viability of rapid and low-cost digital cross-border settlements using the CBDC mechanism, with their counterparts in the US, Hong Kong, and SWIFT.

[69] The digital rupee pilot project's programmable feature was expanded by the RBI on August 30, 2024, to include additional use cases in the areas of fuel, groceries, education, dining out, healthcare, and travel.

Individual users can optionally design other characteristics using this capability, such as the validity period or the geographic regions in which Digital Rupee can be utilized.

The International Monetary Fund claimed that there were too many parallels between instant payment systems and CBDCs to overlook, which could restrict the adoption of the new digital currencies.

[78] The Digital Rupee also aims to lower transaction costs, making both domestic and international money transfers more efficient and accessible.

[78] In the long term, the Digital Rupee may also reduce India's dependency on the U.S. dollar in international trade by providing a robust alternative for cross-border transactions.