Keywords : Central Bank Digital Currency, Digital Rupee, Financial Inclusion, Bank Disintermediation, Monetary Policy, UPI

Abstract : This paper examines the macroeconomic, institutional, and financial inclusion implications of India`s Central Bank Digital Currency, the Digital Rupee (e₹), as introduced by the Reserve Bank of India under the RBI Act of 1934. The study analyses the pilot-stage performance of CBDC, evaluating its design architecture and its interaction with existing payment infrastructure, particularly the Unified Payments Interface. Drawing on empirical evidence from global CBDC experiments (China`s e-CNY, Bahamas` Sand Dollar, Nigeria`s eNaira, and Sweden`s e-Krona), the paper identifies five dimensions of policy relevance: (1) financial inclusion versus exclusion dynamics; (2) monetary policy transmission under partial deposit substitution; (3) bank disintermediation risks across public and private sector banks; (4) privacy, programmability, and civil liberty trade-offs; and (5) geopolitical dimensions of cross-border CBDC adoption. The paper argues that a phased, voluntary, and privacy-preserving implementation—anchored in interoperability with UPI, offline capability, and clear user incentives—is necessary for sustainable adoption.

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