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

Option D is the incorrect statement, making it the correct answer. The critical distinction between the Unified Payments Interface (UPI) and the Digital Rupee lies in the nature of the liability. According to the Reserve Bank of India (RBI), which launched the retail Central Bank Digital Currency (CBDC) pilot on December 1, 2022 [4], the Digital Rupee (e₹) is a sovereign fiat currency. Under Section 26 of the RBI Act, 1934, it represents a direct liability of the central bank (the RBI) [3]. In contrast, funds transferred via UPI are commercial bank deposits, meaning the liability lies with the respective commercial banks [4].

Here is why the other options are correct statements and thus not the answer:

• Option A: This is correct. UPI is a real-time payment interface (a transfer infrastructure developed by NPCI), whereas the Digital Rupee is actual sovereign digital cash [3, 8].
• Option B: This is correct. With UPI, user accounts are debited/credited instantly, but backend interbank settlement occurs periodically. For the Digital Rupee, the wallet-to-wallet token transfer itself constitutes the final settlement, completely eliminating interbank settlement risk—just like handing over physical paper notes [2, 3].
• Option C: This is correct. Every UPI transaction is routed through core banking systems and recorded on commercial bank statements. Digital Rupee transactions are executed directly between e₹ wallets; once funds are withdrawn into the wallet, subsequent peer-to-peer transfers do not reflect on standard bank statements, offering cash-like privacy [7].

Takeaway: UPI is the rail that moves your money (commercial bank liability), whereas the Digital Rupee is the money itself (direct RBI liability).