The introduction of the Reserve Bank of India’s Digital Rupee (Central Bank Digital Currency – CBDC) marks a pivotal shift in India’s financial ecosystem, aiming to strengthen financial inclusion and accelerate the transition to a cashless economy. This study investigates the conceptual framework, design, and operational features of the Digital Rupee while critically examining the challenges and risks associated with its implementation. Adopting a descriptive and exploratory research design, the study collected primary data through surveys and supplemented it with secondary sources such as RBI reports, scholarly articles, and global case studies. The analysis reveals that although 72% of respondents are aware of CBDC, only 14.67% have a comprehensive understanding of its functionality. Awareness is mainly driven by news and social media, while trust in CBDC’s safety remains moderate, with a mean perception score of 3.20 out of 5.
Key challenges identified include limited digital literacy, fear of cyber threats, data privacy concerns, and technological dependency, particularly in rural and underbanked regions. Despite these barriers, the Digital Rupee holds substantial potential to bridge financial access gaps, reduce reliance on cash, and offer a secure, government-backed alternative to existing digital payment platforms. The study recommends targeted awareness campaigns, strong cybersecurity frameworks, legal safeguards, and inclusive access strategies to ensure the effective adoption of CBDC. These findings provide crucial insights for policymakers and financial institutions working towards a digitally inclusive and resilient Indian economy.