RBI launches digital currency retail sandbox for fintech and startups

The Reserve Bank of India (RBI) has introduced a CBDC retail sandbox, expanding access to the digital rupee for fintech firms and startups.

Previously, only select pilot banks were allowed to test the CBDC within closed systems. With this new sandbox, fintech innovators can now access APIs, develop prototypes, and test solutions in a secure, simulated environment.

“The CBDC retail sandbox will give innovators the space to experiment and build on top of the digital rupee,” RBI governor Sanjay Malhotra said while announcing the launch at the Global Fintech Fest 2025. “It will help create new use cases, improve customer experience, and add value to ongoing pilots.”

The RBI launched its first retail e-rupee pilot, India’s version of a Central Bank Digital Currency (CBDC), on December 1, 2022.

Since then, the number of CBDC users in India has grown to around 7 million.

Fintechs can now participate in the CBDC retail sandbox either directly or through partner banks. According to the RBI, this initiative will accelerate innovation while minimizing operational risks for participants.

The Digital Rupee (e₹), India’s central bank digital currency, is issued by the RBI and offers benefits similar to cash—ease of use, settlement finality, and sovereign guarantee.

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To further drive CBDC adoption, the RBI is developing a new market infrastructure called the Unified Markets Interface (UMI). This system will enable the tokenisation of financial assets and settlements via wholesale CBDC, enhancing transparency and efficiency through smart contracts.

RBI Governor Shaktikanta Das noted that early pilot results have been encouraging.

Digital tokenisation enhances transactions by making them faster, cheaper, and more secure. In financial terms, tokenisation means representing real world financial assets as digital “tokens” on a secure ledger, such as a blockchain or distributed ledger technology (DLT).

In the case of deposit tokenisation, bank deposits are converted into digital tokens that can be used, transferred or settled seamlessly across various systems, improving efficiency and interoperability in financial markets.

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