e-Rupee Phase 2 in India 2026: 2025 vs 2026 CBDC Comparison
India’s Central Bank Digital Currency (CBDC) — the e-Rupee — is entering its most significant phase yet. Phase 1 (2022-2025) started with 50,000 users and 5 banks, gradually expanding to 5 million users and 15 banks. Phase 2, launched in 2026, marks a quantum leap — 50+ banks, 25+ cities, offline payments, programmability, and UPI integration. This guide compares e-Rupee Phase 1 (2025) and Phase 2 (2026), explores the new features, and explains how India’s CBDC is reshaping the future of digital payments.
Key takeaway – e-Rupee Phase 2: Phase 1 (2025): 5 million users, 15 banks, limited cities. Phase 2 (2026): 50+ banks, 25+ cities, offline payments, programmability for targeted subsidies, UPI QR integration, and tokenisation. e-Rupee is India’s sovereign digital currency, issued by the RBI, offering the safety of physical cash with the convenience of digital payments.
Summary: e-Rupee Evolution – 2025 vs 2026
- Phase 1 (2022-2025): Pilot launched Dec 2022, 50,000 users → 5 million, 5 banks → 15 banks.
- Phase 2 (2026): 50+ banks, 25+ cities, offline payments, programmability, UPI QR integration.
- e-Rupee vs UPI: e-Rupee is digital cash (no intermediary), UPI is a payment system (requires bank account).
- Offline Payments: Both close-range (Bluetooth/NFC) and QR code-based offline transactions.
- Programmable Money: Targeted subsidies, time-bound spending, conditional transfers.
- Tokenisation: Enhanced security for digital rupee transactions.
1. What is e-Rupee? India’s Digital Currency
The e-Rupee (e₹) is India’s Central Bank Digital Currency (CBDC) — a digital version of the physical rupee. Issued and backed by the Reserve Bank of India (RBI), it represents a direct claim on the central bank, just like physical cash.
| Feature | e-Rupee (CBDC) | Physical Cash | UPI / Digital Payments |
|---|---|---|---|
| Issuer | RBI | RBI | Banks / Payment Systems |
| Form | Digital | Physical | Digital (account-based) |
| Intermediary | None (direct claim on RBI) | None | Yes (banks / payment providers) |
| Offline | Yes (Phase 2) | Yes | Limited |
| Programmable | Yes (Phase 2) | No | No |
- Sovereign-backed: e-Rupee is a direct liability of the RBI, making it risk-free and trustworthy.
- Digital Cash: Like physical cash, e-Rupee transactions are final and don’t require intermediaries.
- Complements UPI: e-Rupee is not a replacement for UPI — it’s a parallel system offering unique features like offline payments and programmability.
- Two Variants: e-Rupee is available in two forms — wholesale (for inter-bank settlements) and retail (for public use).
- Legal Tender: e-Rupee is legal tender in India, just like physical currency.
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2. e-Rupee Phase 1 – 2025 Review
Phase 1 of the e-Rupee pilot (2022-2025) laid the foundation for India’s CBDC journey, starting small and gradually expanding.
- Launch: The e-Rupee retail pilot was launched in December 2022 with 50,000 users and 5 banks in select cities.
- Expansion: By 2025, the pilot had expanded to over 5 million users and 15 participating banks across multiple cities.
- Use Cases: Phase 1 focused on basic person-to-person (P2P) and person-to-merchant (P2M) transactions.
- Banks: SBI, HDFC, ICICI, Axis, Bank of Baroda, PNB, Canara Bank, Union Bank, Kotak Mahindra, Yes Bank, and others.
- Key Learnings: The pilot demonstrated the technical feasibility of a CBDC and helped identify areas for improvement — offline payments, programmability, and wider adoption.
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3. e-Rupee Phase 2 – 2026
Phase 2 represents a major leap forward, expanding the e-Rupee pilot to a significantly larger scale with new features.
| Feature | Phase 1 (2025) | Phase 2 (2026) |
|---|---|---|
| Users | 5 Million | Scaling significantly |
| Banks | 15 | 50+ |
| Cities | Select cities | 25+ cities |
| Offline Payments | Not available | Available |
| Programmability | Not available | Available |
| UPI QR Integration | Limited | Full integration |
| Tokenisation | Limited | Full tokenisation |
- 50+ Banks: All major banks including SBI, HDFC, ICICI, Axis, Kotak, Yes Bank, IDFC First, Federal Bank, and many more.
- 25+ Cities: Expanded coverage across major metropolitan areas and regional cities.
- Offline Payments: Both close-range (Bluetooth/NFC) and QR code-based offline transactions, enabling payments even without internet connectivity.
- Programmability: e-Rupee can now be programmed for specific use cases — targeted government subsidies, time-bound spending, and conditional transfers.
- UPI QR Integration: e-Rupee can be used to scan and pay via UPI QR codes, enabling seamless interoperability.
- Tokenisation: Enhanced security through tokenisation, reducing the risk of fraud.
Learn about digital payment trends with Future of Finance: Key Trends.
4. Key Features of e-Rupee Phase 2
Offline Payments
e-Rupee can now be used for transactions without internet connectivity — both close-range (Bluetooth/NFC) and QR code-based offline payments.
Programmable Money
e-Rupee can be programmed for specific purposes — targeted subsidies, time-bound spending, conditional transfers, and more.
UPI QR Integration
e-Rupee can scan and pay via UPI QR codes, enabling seamless interoperability between CBDC and existing payment systems.
Tokenisation
Enhanced security through tokenisation, reducing fraud risk and improving transaction privacy.
- Offline Payments: India has the highest mobile internet users globally, but there are still significant pockets with limited connectivity. Offline e-Rupee payments address this gap, ensuring financial inclusion.
- Programmability: The RBI can program e-Rupee for specific use cases — enabling targeted subsidies (e.g., fertiliser subsidies, food coupons) to be delivered directly to beneficiaries. This reduces leakage and ensures that funds are used for their intended purpose.
- UPI QR Integration: e-Rupee can scan and pay via existing UPI QR codes, making it easy for merchants to accept e-Rupee without additional infrastructure.
- Tokenisation: Tokenisation replaces sensitive card details with a unique token, reducing the risk of fraud and enhancing security.
- Interoperability: e-Rupee is designed to be interoperable with existing payment systems, ensuring a seamless transition for users.
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5. e-Rupee vs UPI vs Cryptocurrency
Understanding the differences between e-Rupee, UPI, and cryptocurrency is essential for navigating the digital payments landscape.
| Feature | e-Rupee (CBDC) | UPI | Cryptocurrency |
|---|---|---|---|
| Issuer | RBI | NPCI / Banks | Decentralised |
| Value | Fixed (1 e₹ = ₹1) | Fixed (₹) | Volatile |
| Intermediary | None | Yes (banks) | None (blockchain) |
| Offline | Yes (Phase 2) | Limited | No |
| Programmable | Yes (Phase 2) | No | Limited (smart contracts) |
| Risk | Zero (sovereign) | Low | High |
- e-Rupee vs UPI: e-Rupee is digital cash — transactions are final and don’t require intermediaries. UPI is a payment system that facilitates transfers between bank accounts. e-Rupee complements UPI rather than replacing it.
- e-Rupee vs Cryptocurrency: e-Rupee is issued by the RBI and is backed by the full faith of the Indian government. Cryptocurrencies are decentralised and not backed by any central authority. e-Rupee is stable (1 e₹ = ₹1), while cryptocurrencies are highly volatile.
- e-Rupee vs Cash: e-Rupee offers all the benefits of physical cash — anonymity, finality, and offline usability — but with the added advantages of digital convenience and programmability.
Understand digital asset trends with Will Bitcoin Reach $100,000 by Year-End?.
Quick Decision: Which Digital Payment Fits Your Needs?
6. Benefits of e-Rupee
e-Rupee offers a range of benefits for individuals, businesses, and the broader economy.
- Financial Inclusion: e-Rupee can be used without a bank account, enabling access to digital payments for the unbanked population.
- Lower Transaction Costs: e-Rupee transactions are direct and don’t require intermediaries, reducing transaction costs.
- Offline Payments: e-Rupee can be used offline, ensuring that payments are possible even in areas with limited connectivity.
- Programmability: e-Rupee can be programmed for specific use cases — enabling targeted subsidies, time-bound spending, and conditional transfers.
- Reduced Leakage: Programmable e-Rupee can ensure that government subsidies reach the intended beneficiaries, reducing leakage and fraud.
- Increased Transparency: e-Rupee transactions are traceable, increasing transparency and reducing the risk of corruption.
- Currency Sovereignty: e-Rupee strengthens India’s currency sovereignty and reduces dependence on foreign payment systems.
Learn about financial inclusion with Indian Economy 2025 vs 2026.
7. Common Mistakes to Avoid with e-Rupee
Confusing e-Rupee with UPI
e-Rupee is digital cash, not a payment system. It doesn’t require a bank account and works offline.
Expecting crypto-like volatility
e-Rupee is stable (1 e₹ = ₹1). It’s not an investment asset — it’s a medium of exchange.
Ignoring offline capabilities
e-Rupee works offline, unlike UPI. Use it in areas with limited connectivity.
Not tracking expenses
e-Rupee transactions are digital — track them like any other digital payment to manage your budget.
Read our Budgeting Mistakes India for more financial pitfalls.
8. INDwallet Tools to Track Your Digital Payments
- Expenses Wallet – Track all your digital payments, including e-Rupee, UPI, and card transactions.
- Income Wallet – Monitor your income across multiple sources.
- Wealth Wallet – Track your net worth and overall financial health.
- Wallet Score – Get a holistic view of your financial health, including digital payment habits.
- Investment Wallet – Monitor your investments alongside your digital payments.
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