UPSC Previous Year Question | Prelims GS | 2026

Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct?

  1. UPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency.
  2. In case of UPI, settlement for end users happens instantly as the money gets immediately debited or credited but in case of Digital Rupee, there is no settlement as the wallet balance gets transferred to another wallet.
  3. UPI transactions are recorded by banks and reflected in bank statements but in case of Digital Rupee, no data is captured in bank statements as transactions are from one wallet to another.
  4. In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks.

Answer

Correct Answer

In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks.

Explanation

The statement is incorrect because UPI transfers commercial-bank money, whereas the Digital Rupee is a central bank digital currency and represents a direct liability of the Reserve Bank of India. Therefore, liability for Digital Rupee is not with the user's commercial bank in the same way as ordinary bank deposits used through UPI. Hence option D is the incorrect statement.

Topics: central bank digital currency, digital payments, economy, upi