Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct?
Answer & explanation
Answer: (d) In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks.
The Digital Rupee is legal tender issued by the RBI and is a direct liability of the central bank, so it is not a liability of users or their banks. Option (d) wrongly says the liability lies with users and banks in both cases.
- ✓ (d) RBI’s concept note says CBDC appears as a liability on the central bank’s balance sheet, and retail CBDC is a direct liability of the Central Bank. So (d) is the statement that is not correct.
- ✗ (a) This is a correct statement, so it is not the answer: the RBI describes the Digital Rupee as akin to sovereign paper currency in a different form, while UPI is a real-time payment system.
Remember · Digital Rupee (e₹) = RBI liability, akin to a digital banknote; UPI = instant payment over bank accounts, where bank deposits are bank liabilities.
Sources
- RBI: Concept Note on Central Bank Digital Currency (October 2022) ↗ “CBDCs would appear as liability on a central bank’s balance sheet. … Retail CBDC can provide access to safe money for payment and settlement as it is a direct liability of the Central Bank. … It is akin to sovereign paper currency but takes a different form, exchangeable at par with the existing currency and shall be accepted as a medium of payment, legal tender and a safe store of value.”
Question and answer: UPSC's provisional GS Paper I (2026, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·