India and the United Arab Emirates are reportedly exploring the possibility of linking their central bank digital currencies (CBDCs)
If implemented, the system would allow money to move directly between digital currency wallets in the two countries without relying on traditional bank-led settlement systems
The corridor could support both retail remittances and business payments
India and the United Arab Emirates are reportedly exploring the possibility of linking their central bank digital currencies (CBDCs) to enable near-instant cross-border payments between the two countries.
The proposal involves connecting the e-rupee issued by the RBI with the UAE’s planned digital dirham, Mint reported, citing a source.
If implemented, the system would allow money to move directly between digital currency wallets in the two countries without relying on traditional bank-led settlement systems.
Under the proposed setup, fintech platforms operating in both markets could debit a sender’s CBDC wallet in India and credit the recipient’s wallet in the UAE almost instantly, the report said. This could significantly cut the time and cost involved in international transfers, which currently rely on multiple intermediaries such as correspondent banks.
The corridor could support both retail remittances and business payments. The UAE remains one of the largest sources of remittances into India and is home to more than 4 Mn Indians working across sectors such as construction, services and retail.
India has been piloting retail and wholesale CBDC since 2022. According to official data, more than 8 Mn retail users have carried out around 12 Cr transactions worth about ₹28,000 Cr using the e-rupee as of December 2025.
Notably, the government has been working to expand the scope and usage of CBDCs. Last month, it launched a CBDC-based pilot for transfer of benefits under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).
Under the pilot, digital coupons will be credited into the CBDC wallets of beneficiaries. The digital currency can then be only used to redeem the entitled quantity of foodgrains at fair price shops or merchant outlets.
The discussions also come as governments globally explore the use of CBDCs to improve cross-border payments and reduce reliance on legacy financial infrastructure. Linking CBDC systems between countries could allow faster settlement, improved transparency and lower transaction fees.
Alongside government efforts, some private players are also working on blockchain-based payment infrastructure. Blockchain platform Polygon and Indian fintech firm Anq are developing a rupee-backed stablecoin project called ARC that is designed to operate alongside the digital rupee for payments and remittances.
However, the RBI has maintained a cautious stance on stablecoins. RBI officials have repeatedly warned that privately issued tokens could pose risks to monetary stability and financial systems.
Late last year, RBI deputy governor T Rabi Sankar said stablecoins do not provide any utility beyond what fiat currency can already offer and could create risks for monetary policy and banking systems.
The central bank continues to position the digital rupee as a safer alternative for digital payments and settlement.
