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

1. A

   UPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency.

   UPI is a real-time payment system developed by NPCI that facilitates immediate inter-bank fund transfers, whereas the Digital Rupee (e₹) is the central bank digital currency issued by the RBI as a legal tender akin to sovereign paper currency. This statement is correct and thus not the key.

2. B

   In case of UPI, settlement for end users happens instantly as the money gets immediately debited or credited but in the case of Digital Rupee, there is no settlement as the wallet balance gets transferred to another wallet.

   In UPI transactions, settlement happens via the underlying bank accounts where money is debited or credited instantly. In contrast, Digital Rupee transactions represent a direct transfer of digital token value from one wallet to another without requiring traditional bank account settlement per transaction. This statement is correct and thus not the key.

3. 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.

   UPI transactions route through commercial banks and are explicitly reflected in individual bank passbooks or statements. Digital Rupee transactions occur within digital wallets managed by participating banks without individual transaction details clogging traditional bank statements. This statement is correct and thus not the key.

4. D

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

   (d) In the case of UPI, the liability rests with the commercial banks holding the deposits. However, for the Central Bank Digital Currency (Digital Rupee), the liability is directly that of the Reserve Bank of India (RBI) as it is a sovereign liability, not the commercial bank's. Therefore, claiming liability lies with users and their respective banks in both cases is incorrect.

Summary. Official key is (d) because the Digital Rupee is a direct liability of the RBI as sovereign currency, unlike UPI where funds and liabilities remain with commercial banks.