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June 14, 2026
The Dispatch

Definition

Central Bank Digital Currency (CBDC)

A Central Bank Digital Currency is a digital form of a country's sovereign currency issued by the central bank; in India it is the RBI's Digital Rupee (e₹).

The Digital Rupee (e₹) is legal tender issued by the RBI in digital form, distinct from money in bank deposits. It comes in a retail version (for everyday public use via wallets offered by banks) and a wholesale version (for interbank settlement).

Unlike private cryptocurrencies, a CBDC is a direct liability of the central bank, carrying no credit risk of a commercial bank and not subject to the volatility of crypto assets. The RBI has piloted features like programmability and offline use.

The Digital Rupee aims to modernise payments, reduce cash-handling costs and offer a public digital-money option; it is fundamentally different from VDAs taxed under crypto rules.

Related terms

  • e-RUPIe-RUPI is a prepaid, purpose-specific digital voucher delivered via SMS or QR that can be redeemed only for a designated service, without needing a card, app or bank account.
  • CryptocurrencyA cryptocurrency is a digital asset that uses cryptography and a blockchain to record transactions without a central authority; in India it is a taxed VDA, not legal tender. This is informational, not advice.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.