RBI’s BRICS CBDC Dream: Selling e-Rupee Abroad, But India Isn’t Buying

CBDC vs. BRICS: RBI Sells the e-Rupee Globally, But India Isn’t Buying

Key Highlights

Big global pitch, weak local pull: The RBI is pushing CBDC integration across BRICS, but India’s own banks and users haven’t shown real interest in the digital rupee.
A rise, then a reality check: Digital rupee transactions briefly crossed 1 million a day before falling sharply—highlighting forced adoption, not organic demand.
Tax clarity, policy vacuum: Over 44,000 tax notices have been sent, but India’s long-promised crypto framework remains stalled, leaving the industry in limbo.

The Reserve Bank of India’s new plan is surprisingly ambitious, considering its struggles to promote the digital rupee within India itself. They now aim to connect it with the digital currencies of Brazil, Russia, China, South Africa, and other BRICS nations. While the idea seems impressive in theory, the current situation suggests it will be difficult to achieve.

A Reuters report from January indicates that India’s central bank, the RBI, has suggested to the government that exploring a link between the digital currencies of BRICS nations be discussed at the 2026 BRICS summit, which India is hosting. The goal is to use these national digital currencies for international transactions – things like trade and tourism – to lower fees and lessen the BRICS group’s reliance on the US dollar.

India assumed the BRICS presidency on January 1, 2026, and its central bank intends to leverage this position to promote its own payment systems.

Let’s first clarify what BRICS is and why the Reserve Bank of India is paying attention to it, before we discuss why highlighting this connection seems unusual.

What is BRICS, and why is the RBI obsessed with it

BRICS began in 2009 as an informal association of Brazil, Russia, India, China, and South Africa. It started because these major developing economies believed the existing global financial system – heavily influenced by the US dollar and organizations like the IMF and World Bank – didn’t adequately address their needs or perspectives.

The group has grown to now include Egypt, Ethiopia, Iran, the UAE, and Indonesia, and even more countries are interested in becoming members.

As a researcher, I’ve been following BRICS closely, and it’s important to understand it’s not the same as the G20. The G20 is a much larger group, including major economic powers like the US, the European Union, and Japan – it’s where global financial rules are largely set. BRICS, however, is evolving into something different. Increasingly, it’s becoming a forum for countries that feel pressured by the financial influence of Western nations and are looking to create alternative systems.

The BRICS nations have established a development bank and a task force focused on payments. They recently agreed on a plan for cross-border payments at their 2025 meeting in Rio. Now, if India’s central bank succeeds, a system linking BRICS countries’ digital currencies could be the next step.

It’s no coincidence this is happening now. Trump’s constantly labeled BRICS as being against the US and threatened huge tariffs if those countries try to move away from the dollar. While the Reserve Bank of India claims their digital currency plans aren’t about ditching the dollar, let’s be real – everyone understands what they’re *really* talking about behind closed doors. As a crypto investor, I see this as a major signal about the future of finance.

The awkward part: Nobody at home is using the e-rupee

The Reserve Bank of India (RBI) is facing some challenges with its digital rupee, launched in December 2022. After three and a half years, only around 7 million people are using it. To put that in perspective, the popular UPI payment system handles more transactions in just one afternoon than the digital rupee has processed in its entire history.

In December 2023, the number of daily e-rupee transactions briefly surpassed 1 million after the Reserve Bank of India urged banks to promote it. Some banks even paid portions of employee salaries using the digital currency to reach this milestone. However, a Reuters report analyzing internal data shows that daily retail transactions plummeted to around 100,000 by mid-2024.

The digital rupee used for transactions between banks hasn’t gained much traction, and its usage has dropped significantly since its initial launch.

For anyone familiar with UPI, the benefits are clear: it’s free, immediate, and works on all smartphones. It’s hard to understand why merchants or customers would choose an alternative system that offers fewer options and no real advantages. Even the banks the Reserve Bank of India is encouraging aren’t enthusiastic about switching.

Currently, you can’t use popular payment apps like PhonePe or Google Pay to access India’s new digital currency (CBDC). Banks fulfilled the basic requirements from the Reserve Bank of India, but haven’t prioritized further development or wider access.

This is the main issue with the BRICS plan. India’s central bank is attempting to promote a system that isn’t widely used within its own country.

Four years of conflicting signals

To figure out how India reached this point, it’s important to consider the mixed signals from those in charge of the policy. Their words clearly show the problem.

As a researcher following the development of crypto asset regulation, I noted that India’s Finance Minister, Nirmala Sitharaman, announced a 30% tax on virtual digital assets as part of the Union Budget 2022. During her speech to the Lok Sabha on February 1, 2022, she explained that the significant rise in transactions involving these assets made a specific tax policy necessary. She proposed that all income earned from transferring virtual digital assets would be taxed at a flat rate of 30%.

As an analyst, I remember vividly when the Finance Minister made a single statement during her post-Budget press conference that really set the direction for Indian crypto regulation. She clarified that while the official currency was solely managed by the Reserve Bank of India, everything else in the digital asset space would be treated as crypto assets and subject to a 30% tax. That one sentence has essentially defined Indian crypto policy for the last four years.

When asked about taxing cryptocurrency before having clear rules in place, the official explained that they’re gathering information for potential regulations, but won’t delay collecting taxes from those already profiting. It was a surprisingly direct answer, clearly indicating the government’s priority: impose taxes now, and worry about regulation later, if at all.

Speaking at an economic conference in October 2025, Finance Minister Sitharaman expressed a more open view on stablecoins. She explained that innovations like stablecoins are changing how money and investments move around the world, and countries may need to embrace these new systems or risk being left behind. This was the first time a high-ranking Indian official had publicly stated that India could face negative consequences if it didn’t address stablecoins.

Then comes the RBI side, and this is where the contradictions get loud.

Shaktikanta Das, the former head of the Reserve Bank of India, was a strong and outspoken critic of cryptocurrencies. He often likened crypto trading to gambling and advocated for a complete ban, believing it could harm monetary policy and lead to an uncontrolled financial system. While his replacement, Sanjay Malhotra, shares similar concerns, he’s expressed them in a more moderate way.

I was listening to Malhotra speak after the recent monetary policy announcement on June 6th, 2025, and he basically said there haven’t been any new decisions regarding crypto. He mentioned a government committee is still looking into it all. He also reiterated the RBI’s concerns – they’re worried crypto could potentially disrupt financial stability and make it harder to manage monetary policy. He said all of this publicly during the press briefing in Mumbai, so it’s officially on the record.

In November 2025, during a speech at the Delhi School of Economics, Malhotra emphasized the significant risks associated with stablecoins and cryptocurrencies, explaining that the central bank was proceeding with caution. He highlighted this careful approach in contrast to their support for innovation driven by the government.

We’ve generally been very supportive of new digital technologies like UPI and digital lending. The underlying message was clear: government-backed systems are considered safe, while private ones are viewed with suspicion.

T. Rabi Sankar, a Deputy Governor at the Reserve Bank of India (RBI), has consistently voiced concerns about cryptocurrencies. Speaking at a financial conference on December 1st, he stated that cryptocurrencies lack inherent value because they aren’t backed by any guarantee or issuer. He described trading them as a risky gamble, similar to the speculative tulip bubble of the 1600s.

The official was particularly critical of stablecoins, expressing strong concerns about their potential impact on the financial system – including monetary stability, government financial policy, banking operations, and overall resilience. These concerns were echoed in a recent report from the Reserve Bank of India, which emphasized the importance of central bank digital currencies over privately issued stablecoins. The report argued that prioritizing central bank digital currencies is crucial for maintaining trust in money, ensuring financial stability, and building faster, cheaper, and more secure payment systems.

During the IMF and World Bank meetings in Washington D.C. in October 2025, Malhotra argued that widespread adoption of central bank digital currencies (CBDCs) is crucial to realize their full potential, particularly for international payments. He encouraged central banks around the world to prioritize CBDCs, highlighting their advantages over stablecoins, but stressed that benefits won’t be realized unless multiple countries participate.

He explained that they favor India’s central bank digital currency (CBDC) over other cryptocurrencies. This is because cryptocurrencies could create challenges for managing monetary policy, controlling financial flows, and preventing money laundering. They see CBDCs as offering the same benefits without those risks, and therefore prefer to support its development.

That single paragraph sums up the BRICS initiative. The Reserve Bank of India is attempting to persuade other central banks to adopt an idea that Indian banks haven’t yet embraced themselves.

The discussion paper that refuses to arrive

Despite ongoing developments, a key document that could provide much-needed clarity for India’s cryptocurrency industry has been put on hold – for the fifth time this month. The much-anticipated policy paper discussing crypto regulations has been delayed again, reportedly due to concerns from the Reserve Bank of India.

India’s plan to establish clear rules for cryptocurrency has been delayed for over a year, originally anticipated in 2023. The document was intended to outline the government’s approach, gather public feedback, and provide the industry with a foundation for future planning. While promised in both 2024 and June 2025, the release date has been repeatedly postponed. According to a government insider, disagreements within the group responsible for drafting the regulations are the cause of the delays. The Reserve Bank of India (RBI) is focused on the potential risks of crypto, while other agencies are more willing to consider a more nuanced, segmented regulatory approach.

According to a Reuters report from September 2025, based on a government document, India was hesitant to create broad laws for cryptocurrency. Officials worried that doing so might give the industry official approval and potentially make it a significant part of the financial system, which could create risks.

That idea originated with the Reserve Bank of India (RBI). Their report previously mentioned that people in India owned around $4.5 billion in cryptocurrencies, but stated it wasn’t yet a widespread risk. As of April 2026, however, that report has been shelved with no clear plans for future action. There’s currently no set timeframe or promise of a regulatory structure – just an empty space where rules should be.

Both the Finance Ministry and SEBI seem willing to create a clearer framework for regulating cryptocurrencies, and recent government reports suggest potential support for stablecoins. SEBI has even suggested a system where multiple agencies would be involved in oversight. However, ultimately, the Reserve Bank of India (RBI) will have the final say on any new regulations.

And yet, the tax net keeps expanding

Indian cryptocurrency investors should take note of this: despite a lack of clear rules, crypto is still heavily taxed. The 30% tax on profits and the 1% tax deducted at source on every trade, first introduced in 2022, are still in effect. The recent Union Budget 2026, presented on February 1st, didn’t include any changes to these taxes.

Okay, so here’s the deal with the new rules. Starting April 1st, 2026, if I don’t report my crypto transactions correctly – meaning I miss the filing requirements – I’m looking at a daily penalty of ₹200 for every day I’m late. And if I get the information *wrong* on my filings, it’s a straight ₹50,000 fine. Definitely need to stay on top of this!

The Finance Bill of 2025 broadened the definition of Virtual Digital Assets, starting April 1st, to encompass any cryptocurrency that uses secure distributed ledger technology. This change aligns India with international standards set by the OECD’s Crypto Asset Reporting Framework.

India’s Income Tax Department has discovered over ₹888.82 crore in hidden cryptocurrency holdings and has issued notices to more than 44,000 taxpayers who appear to have not reported their crypto investments. While the department has collected around ₹437 crore in crypto taxes between 2022 and 2025, this suggests a large portion of crypto trading activity is now happening outside of India.

Around 72% of all cryptocurrency trading that used to happen in India is now taking place on international exchanges. Ironically, the tax intended to monitor the crypto industry has actually driven it underground, making it harder to regulate.

The traditional market angle

The BRICS plan for a new digital currency isn’t happening in isolation. The Indian rupee has been weakening significantly, consistently losing value against the US dollar throughout 2025 and 2026. This has forced India’s central bank to actively intervene in currency markets, and foreign investors have been withdrawing funds from Indian stocks and bonds.

The BRICS plan to create new payment systems makes sense given the current global economic situation. If countries are concerned about the increasing value of the US dollar and potential trade restrictions from the United States, establishing alternative payment methods with partner nations is a logical step. By encouraging countries like Brazil, China, and Russia to use their own digital currencies (CBDCs) for trade with each other, they can lessen their dependence on the dollar and avoid using payment systems controlled by the US. There’s a clear strategic reason behind this initiative.

The execution logic is where it falls apart.

Why this matters for crypto

The Reserve Bank of India is promoting central bank digital currencies (CBDCs) as a solution for international payments, while also warning people about the risks of cryptocurrencies and stablecoins. However, the reality doesn’t quite match this optimistic view. India’s retail CBDC hasn’t gained much traction, with only about 7 million users. Use of the wholesale CBDC is even lower. Furthermore, none of the BRICS nations have fully launched their own CBDCs.

China leads the world in central bank digital currency (CBDC) technology, and most of its international CBDC transactions happen through the mBridge project. While Brazil, Russia, and South Africa are exploring CBDCs, they are still in the testing phase and haven’t achieved the same level of progress.

Ironically, the solution to fast, low-cost international payments – stablecoins – is something India’s central bank, the RBI, is hesitant to allow. In 2025, stablecoins facilitated trillions of dollars in cross-border transactions, settling almost instantly and with minimal fees, all without needing central bank approval. While not without flaws, the RBI has valid concerns about the potential impact of stablecoins on India’s monetary control.

It’s unlikely that simply connecting the potential digital currencies of five major economies – none of which currently have functioning digital currencies – will quickly surpass or replace the existing stablecoin market.

As an analyst, I’m struck by the internal conflict within the Indian government regarding stablecoins and crypto. While the Finance Minister recognizes stablecoins are changing the financial landscape and that ignoring them could leave India behind, the Reserve Bank of India views them as a serious risk to the financial system. It’s a real paradox. What’s even more puzzling is the stalled regulatory process – the Finance Ministry has been developing a discussion paper for two years, but the RBI has repeatedly blocked its publication. This inaction is happening alongside some of the highest crypto tax rates globally, and the industry is receiving absolutely no clear regulatory guidance. It feels like the government can’t decide which path to take.

Despite limited success promoting India’s digital currency domestically, the central bank plans to propose a connection between it and the digital currencies of Brazil, Russia, China, and South Africa at an upcoming BRICS summit. This is a bold proposal considering the slow adoption of the digital rupee within India itself.

The bottom line

India’s goals for a central bank digital currency (CBDC) are perfectly reasonable, and it makes sense to use its position within BRICS to advocate for quicker and less expensive international payments. Similarly, the Reserve Bank of India’s careful approach to private cryptocurrencies is understandable. However, these three stances ultimately clash with each other and can’t realistically coexist.

If digital currencies issued by central banks (CBDCs) are truly the future, the Reserve Bank of India needs to clarify why its own digital currency hasn’t gained traction. If stablecoins pose such risks that they can’t be regulated, the Finance Minister should explain why she previously described them as a major influence on the future of money. And if the government’s discussion paper on this topic has been finished for two years, they need to explain why it’s been delayed five times.

Look, I’m really interested in the idea of BRICS making international payments easier and cheaper for people like me and businesses. But honestly, it doesn’t quite add up. They’re talking about streamlining things, yet none of the countries involved actually have a fully functioning digital currency for everyday use. Someone needs to explain how this is going to work in practice – it feels like a piece of the puzzle is missing.

For four years, India’s cryptocurrency sector has been operating in a state of uncertainty. Despite this, twelve million Indians currently own digital assets, and the country consistently leads the world in crypto adoption, according to Chainalysis. With the ETH DevCon conference coming to Mumbai this November, the developers, users, and investment are all present – what’s lacking is clear guidance from the government.

For now, the Reserve Bank of India will continue promoting the digital rupee internationally, while the recent discussion paper remains largely ignored. The government will keep collecting taxes, and many Indians will continue using unregulated offshore exchanges, which the regulator seems to overlook. While the idea of a BRICS currency sounds good, it highlights the fundamental problems with India’s approach to money in 2026.

Things are changing rapidly, especially in India where new taxes are being introduced. While the Reserve Bank of India discusses the future, the digital rupee remains largely unused.

2026-04-14 11:20