UPSC CSE 2026 · PYQ · Digital Currency / UPI & CBDC · medium
Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct?
A.UPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency.
B.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.
C.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.
D.In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks.✓ Correct
Explanation
Statement (d) is incorrect. In the case of UPI, the underlying funds are held in bank accounts, so the liability lies with the banks. However, in the case of Central Bank Digital Currency (Digital Rupee/e₹), the liability lies with the Reserve Bank of India (the central bank), not with commercial banks or users. The Digital Rupee is a sovereign currency issued by the RBI and represents a direct claim on the central bank, similar to physical currency. Statements (a), (b), and (c) correctly describe the differences between UPI (a payment system that moves money between bank accounts) and Digital Rupee (a digital form of sovereign currency held in wallets).
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