India and the United Arab Emirates (UAE) are exploring a framework that could link their central bank digital currencies to enable quicker cross-border transfers, according to Mint reports.
The plan involves connecting the Reserve Bank of India’s e-Rupee with the UAE’s Digital Dirham.
If the system is introduced, funds could move directly between digital wallets in the 2 countries.
The arrangement would reduce reliance on traditional banking channels that typically route international transfers through several intermediary institutions.
Payments made through central bank digital currencies are designed to move directly from one wallet to another.
Under the proposed structure, a fintech platform operating in both countries could debit a sender’s CBDC wallet in India and credit the recipient’s wallet in the UAE with the corresponding amount.
Such transactions are expected to settle almost immediately. The mechanism could be used for everyday remittances as well as larger business payments across the two economies.
The potential link is relevant given the scale of financial flows between India and the UAE. The Gulf nation is home to more than 4 million Indians working across sectors such as construction, retail and services.
The UAE accounts for about 19.2% of the remittances received by India. While the United States has recently overtaken it as the largest source, the UAE continues to remain a major contributor to overseas inflows.
India began testing its central bank digital currency in 2022 through retail and wholesale pilot programmes.
Retail CBDC is intended for payments between individuals and merchants, while the wholesale version focuses on settlements between financial institutions.
According to central bank data available up to December, more than 8 million users are part of the retail e-Rupee pilot. Around 120 million transactions worth nearly ₹28,000 crore have been processed through the platform.
The Central Bank of the UAE introduced Digital Dirham as legal tender in 2024. India’s central bank has also indicated that it is examining bilateral and multilateral arrangements to test cross-border digital currency payments.
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Discussions between the 2 countries are still at an exploratory stage. A connected CBDC corridor, if developed, could become an additional channel for transferring money between India and the UAE.
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Published on: Mar 7, 2026, 10:24 AM IST
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