Civil Services Prep

Prelims 2026 · Economy · Question 90

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

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

A is correct: RBI says e₹ is a digital form of the rupee, while UPI is only a means of payment. B is acceptable in exam sense because e₹ P2P/P2M transfers occur wallet-to-wallet and do not pass through users’ bank accounts. C is broadly correct for the same reason: wallet-to-wallet e₹ transfers are outside ordinary bank-account movement, unlike UPI entries. D is not correct because e₹ is legal tender and a liability of the Reserve Bank of India, not of users and their banks.

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