Why India’s CBDC requires private infrastructure partners to grow beyond pilot zones

In late 2022, when the Reserve Bank of India (RBI) introduced its Central Bank Digital Currency (CBDC) pilot, or the digital rupee or e₹, it was a cautiously optimistic step towards the future of money. For a country that sees billions of UPI transactions on a monthly basis, bringing a new currency into existence wasn’t about revolutionising the wheel—it was about creating a wiser one.

But the reality is this: a government cannot by itself popularise a digital currency. Not in a nation so large, so heterogeneous, and so digitally advanced as India. To really take root outside of pilot projects and strictly controlled experiments, India requires private infrastructure players—fintech companies, payment gateways, wallet operators, and even startups—who can facilitate the connection between central banks and citizens.

Let's unpack why.

Distribution is everything: Go where the people are

Most pilots of CBDCs have been carried out through big public and private banks. But these are slow to change, by their nature, and their reach is limited, by and large, to people they already know.

Compare that to digital payment apps such as PhonePe, Paytm, Google Pay, Amazon Pay, or CRED—platforms that have already gained the confidence of millions of Indians across geographies and income segments. When the RBI granted permission to some of these fintech’s to provide CBDC wallets in 2024, adoption improved significantly.

Why? Because everyone’s already there. They have faith in these interfaces, know how to use them, and rely on them every day. Bringing the e₹ through well-known platforms is the most natural way to get people using it without modifying behaviour.

The CBDC doesn't have to invent the wheel; it must tap into the car that’s already in motion.

Speed of innovation: Govt sets the rules, private sector builds the tools

Government bureaucracies are wary—and correctly so. But that wariness can turn into complacency without outside force.

Private sector infrastructure actors live and breathe iteration. A fintech firm can release 10 distinct user experiences in a month, A/B test them, gather feedback, and optimise. That's a rate central banks cannot do internally.

Consider IndusInd Bank's CBDC carbon-credit payout pilot for farmers—a compelling real-world application that likely would never have been developed in a traditional lab. Or startups creating smart contracts to make conditional disbursements automatic through e₹ wallets. These are not being developed from regulators—they’re being developed by agile builders on the ground.

If CBDC is going to remain practical and relevant, it must have this ability.

Rural and real-world ready

India’s digital narrative is not cities alone. Real scale is in Tier II cities, villages, and areas with intermittent internet and legacy infrastructure. And who is on the ground there? Local payment service providers and fintech firms.

Startups and platforms that are already integrated with kirana stores, street vendors, offline-first merchants, and feature phone users intimately know the challenges: low bandwidth, low digital literacy, and change aversion. They have invested years figuring out these limitations, and that’s an experience you can’t replicate in a conference room.

Take the CBDC’s offline functionality, which is in the process of being tested. For it to be functional in Bharat and not merely India, private players need to co-create and implement real-world solutions that are usable, intuitive, and robust.

Infrastructure at scale, without starting from scratch

Scaling CBDC involves making it possible for millions of merchants to accept it—without requiring them to learn a new QR code, a new POS terminal, or a new learning curve. That’s where private infrastructure shines.

UPI worked in part because it rode on top of established rails. The same reasoning applies here. When CBDC wallets are coupled into platforms merchants already have, adoption is seamless.

Firms such as Mintoak, having just acquired Digiledge, are now in the process of providing merchant-facing CBDC infrastructure, enabling businesses to accept e₹ just as readily as they accept digital rupees. Private efforts like these ensure that CBDC doesn’t remain locked in an ivory tower but truly reaches shop floors and service counters.

Trust by familiarity

Financial behaviour is emotional as well as rational. Individuals embrace what feels reliable and convenient, and not necessarily what’s secure or better-regulated.

That's why launching e₹ through platforms individuals already use—let’s say, CRED or Paytm—not only increases visibility but also humanises what would otherwise be an intangible innovation. CBDC is not only a government-issued experiment but is also a reliable component of an individual’s daily financial life.

With trusted fintech firms as the intermediary, the digital rupee is not alien; it’s a natural extension of what’s already working.

Scaling use cases past ‘just another wallet’

If CBDC is limited to just being used to pay for coffee or groceries, it could be a one-off novelty. But private partners can open up powerful use cases that integrate e₹ more deeply into the fabric of the economy:

Smart subsidies: Automatically programmable payments based on need

Micro-lending: Tokenised disbursements with real-time traceability

Carbon credits & climate action: Analogous to IndusInd’s pilot among farmers

Cross-border trade: CBDC corridors for exporters & remittances

None of these will occur organically out of government institutions. They will arise out of entrepreneurial experimentation, aided by regulators, but driven by the private sector.

A win-win model: Public trust + private innovation

This is not a tale of public versus private conflict. It is a blueprint for cooperation.

The RBI issues the guidelines, lays down the security protocols, and regulates monetary policy. The private players provide the reach, the technology, and the human touch that makes e₹ viable at scale.

It's a public-private handshake, not a struggle for power.

Actually, India’s digital public infrastructure model—from Aadhaar to UPI—has always been based on this public-private handshake. CBDC is merely the next installment in that tradition.

Doers and collaborators

CBDC can transform the way India conceptualises money, access, inclusion, and even accountability. But it won’t be a success in isolation. To go beyond pilot areas into real lives, the RBI requires an army of doers, thinkers, testers, and builders.

And those doers are already out there—in the fintech firms, platforms, and startups that fuel India’s digital economy day by day.

The e₹ does not require more features. It requires more collaborators.

The author is CEO and Co-founder of Qila.io, an enterprise blockchain platform.