UPI vs Central Bank Digital Currency (e-Rupee)
Question
Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct?
Options
UPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency.
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.
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.
In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks.
Explanation
Statement (d) is incorrect and forms the required answer. In the case of a Central Bank Digital Currency (Digital Rupee), the digital token represents a direct legal tender liability of the central bank (the Reserve Bank of India), completely bypassing commercial bank balance sheets. Conversely, UPI transactions process commercial bank deposit liabilities. Statements (a), (b), and (c) are all accurate descriptions : UPI acts as a commercial channel that moves money between bank accounts , whereas the e-Rupee functions as digital legal tender cash that moves between personal digital wallets without requiring commercial bank settlement intermediation.
Question details
Year
2026
Paper
GS Paper 1
Question
Q55
Subject
Economy
Sub-topic
Monetary Policy & Inflation
Type
Factual single
Difficulty
Medium
Nature
Current-affairs-linked
Source hint
RBI e-Rupee Concept Notes / Monetary Policy Reports
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