CENTRAL BANK DIGITAL CURRENCY

(DBTD CIRCULAR No.31/2024)
CBDC (Digital Rupee) is a legal tender issued by central bank in digital form. It is the same as a
sovereign currency and is exchangeable one-to-one at par (1:1) with the fiat currency. RBI has
announced the launch of the first pilot for retail digital rupee on December 01, 2022.It would be
distributed through intermediaries i.e. Banks.
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Features of CBDC
CBDC is sovereign currency issued by Central Banks in alignment with their monetary policy .
It appears as a liability on the central bank’s balance sheet
Must be accepted as a medium of payment, legal tender, and a safe store of value by all citizens,
enterprises, and government agencies.
Freely convertible against commercial bank money and cash.
Fungible legal tender for which holders need not have a bank account.
Expected to lower the cost of issuance of money and transactions.
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Motivations for issuance of CBDCs
Reduction in cost associated with physical cash management
To further the cause of digitization to achieve a less cash economy
Supporting competition, efficiency and innovation in payments
To explore the use of CBDC for improvement in cross-border transactions
Support financial inclusion
Safeguard the trust of the common man in the national currency vis-à-vis proliferation of crypto
assets
Types of CBDC
Based on usage and function performed CBDC can be classified into two categories
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❑ CBDC-Wholesale
❑ CBDC-Retail

 

CBDC-Wholesale
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Wholesale market for asset classes which are OTC and bilaterally or settled outside CCP
arrangements- CPs, CDs, etc.
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Access to retail for buying assets such as G-secs, CPs/CDs, primary auctions etc. bypassing the
bank account route.
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In case of g-secs, if assets are also tokenized, this could be extended to nonresidents to investment
in domestic asset classes.
CBDC-Retail
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CBDC-R is mainly devised for consumption of common public with features akin to physical cash
viz. anonymous, unique serial number etc. A token-based system would ensure universal access –
as anybody can obtain a digital signature – and it would offer good privacy by default.
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Moreover, the token generated will have a unique token number which will enable the detection of
counterfeiting of tokens and potentially also the restoration of value if an individual loses the device.
Under a token-based CBDC-R regime, users would be able to withdraw digital tokens from banks in
the same way they can withdraw physical cash.
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They would maintain their digital tokens in a wallet and could spend them online or in person or
transfer them via an app.
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The token based CBDC also supports innovation with an ability to include programmable feature
that supports efficiency such as standardization of compliance rules, fraud detection, wrapped
CBDC to other use cases in future.
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It has been migrated to the Unspent Transaction Output (UTXO) model on the Central Bank
Digital Currency (CBDC) platform. This model offers more scalability, security, and flexibility in
handling digital currency transactions. customers can now transact in any decimal values (up to 2
digits) on the Central Bank Digital Currency (CBDC) platform to make precise payments without
rounding off amounts, ensuring more accurate transactions.(DBTD 32/2025)
Limits of CBDC(.(DBTD 32/2025))
Limit
Particulars
Holding capacity for wallet (Amount)
Rs. 1,00,000
Per day Load / Unload (Amount)
Rs. 1,00,000
Limit on redemptions (24 hours)
Rs. 1,00,000
Rs. 50,000
Outward transfer limit (24 hours)
Per transaction limit (Amount)
Rs. 10,000
Per transaction (pay/collect)
Rs. 5,000
250
No. of Load / Unload (Count)
100
Maximum number of P2P transactions (30 days)
Rs. 5,000
Transaction limit in cooling period (i.e., newly