Reserve Bank of India Expands Digital Rupee and Fraud Tools

The Reserve Bank of India announced a broad expansion of its central bank digital currency (CBDC) and digital security infrastructure in its 2025-26 annual report. The bank is extending digital rupee pilots to retail payments, business applications, and government direct benefit transfer schemes. In Gujarat, Puducherry, and Chandigarh, the bank used programmable CBDC to distribute food subsidies, restricting redemption to eligible commodities at designated merchants to ensure public funds are used productively.

To modernize financial markets, the bank developed the Unified Markets Interface (UMI), a platform for the tokenisation of financial assets, and launched a pilot for tokenised certificates of deposit. The bank also released the beta version of its Indian Financial Sector (IFS) cloud platform for financial firms. Internationally, the RBI signed a memorandum of understanding with the Monetary Authority of Singapore and held discussions with the Central Bank of the UAE to operationalise cross-border CBDC pilots, while joining the Bank for International Settlements Innovation Hub's Project Rialto and Project Mandala.

Addressing a surge in digital scams, the bank is exploring a kill switch and a switch-on/off facility for all digital payment modes, including UPI. This follows a Ministry of Home Affairs committee's efforts to combat digital arrest scams that caused nearly Rs 3,000 crore in losses. The RBI also plans to launch the AI-backed Digital Payments Intelligence Platform this year to assign real-time risk scores to transactions.