Categories: BankingCurrent Affairs

RBI Launches Retail Sandbox for Digital Currency

The Reserve Bank of India (RBI) has launched a retail sandbox for its Central Bank Digital Currency (CBDC) on October 8, 2025, marking a significant development in India’s evolving digital financial ecosystem. This initiative opens the door for fintech companies to test and deploy innovative products for the e-Rupee retail pilot, first launched on December 1, 2022. This move strengthens India’s efforts to become a global leader in digital currency adoption, while creating a regulated space for experimentation in digital payment solutions.

What is the RBI Retail CBDC Sandbox?

A sandbox is a controlled environment where new technologies can be safely tested without affecting the broader financial system. The RBI retail sandbox allows selected fintechs to build tools that,

Integrate with the e-Rupee infrastructure
Simulate real-world retail transactions
Innovate around payment, settlement, and tokenisation processes

This sandbox is an extension of the ongoing CBDC pilot, which now has around 7 million users across India, and is running in collaboration with several major banks.

What is the e-Rupee (CBDC)?

India’s e-Rupee is a central bank digital currency, representing the digital form of the Indian Rupee. Unlike cryptocurrencies, it is regulated and issued by RBI and holds the same value as physical currency.
The retail version is meant for use by the general public for everyday digital transactions
The wholesale version focuses on interbank settlements and large-scale financial infrastructure

Digital rupee transactions are expected to be faster, cheaper, and more secure, and can be used without internet connectivity through offline wallet modes.

Key Features of the Sandbox

Fintech Collaboration: Enables startups and tech firms to build apps using RBI’s CBDC backend
Tokenisation Support: Digital rupee tokens represent money in a secure, transferable form
Real-Time Testing: Allows testing of retail payment models, POS systems, digital wallets, and cross-platform integration
Wholesale Layer Involvement: The sandbox leverages the wholesale CBDC as the backbone for retail testing

This initiative is led by Suvendu Pati, Chief General Manager at RBI, who reiterated that token-based systems can revolutionize banking with more fluid, interoperable, and faster transactions.