The Reserve Bank of India (RBI), on 1st December 2022, through a pilot project, launched retail central bank digital currency (CBDC) (`) with `1.71 crores with four participating banks in four cities. The RBI created around 1.5 million users in the project before its more comprehensive application. The CBDC may form in either token or account types, and the RBI for ` prefers the token. Tokenisation can be physical and digital, and its trading is possible in full and fractionally. For smooth implementation of retail digital currency (DC), the RBI Act was amended incorporating DC as a legal tender at par with currency notes and coins as a legal tender. Although the pilot project reports a successful launch and the RBI made it compatible with quick response (QR) codes, Indians’ cash preference remains. Against this backdrop, the present study assesses the relative merit of in the CBDC retail scenario. The study concludes that DC retail could substantially transition the Indian financial market if the RBI and government could counter the fundamental challenges associated with its success, such as the provision of working without internet connectivity.

RBI, cryptocurrency, CBDC, `, cash

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