Digital Public Infrastructure for Financial Inclusion and Health
Indian Economy
- PYQs8
- Articles1
Background
DPI is a cornerstone of India's digital transformation and economic strategy, crucial for efficient governance, inclusive growth, and leveraging technology for development. It demonstrates how India is using its unique digital assets to address socio-economic challenges and achieve national goals.
India's Digital Public Infrastructure (DPI) refers to a robust, open, and interoperable digital ecosystem built on foundational platforms like Aadhaar, UPI, and Jan Dhan accounts. It is being leveraged to provide scalable and efficient delivery of financial services, enhance financial capability, and promote deeper financial inclusion and health across the population.
Facts & tables
- Components
- Comprises foundational digital platforms (e.g., Aadhaar, UPI, Jan Dhan) and innovative applications (e.g., Account Aggregators, ULI, DigiLocker).
- Integration
- Enables seamless integration of welfare schemes (DBTs, pensions, insurance) with individual bank accounts, especially for informal workers.
- Empowerment
- Strengthens household financial capability, choice, and agency at scale by providing access to responsible credit, savings, and investment products.
- Security
- Aims to combat financial fraud and scams through secure digital transactions and data management.
| Type | Reference |
|---|---|
| Conceptual area | Indian Economy |
| Body | Role |
|---|---|
| Reserve Bank of India | Regulates digital payment systems and financial innovation |
| National Payments Corporation of India (NPCI) | Operates retail payments and settlement systems |
| Ministry of Electronics and Information Technology (MeitY) | Promotes digital infrastructure and e-governance |
Prelims angle
Prelims angle: Factual recall
Prelims angle: Purpose or function of a policy tool
- Built on Aadhaar, UPI, Jan Dhan.
- Enables scalable, efficient financial services.
- Integrates welfare schemes (DBT, pensions).
- Enhances financial capability & agency.
- Key for India's digital transformation.
| Year | Framing tags |
|---|---|
| 2026 | Multi-statement analysis, Conceptual understanding |
| 2026 | Multi-statement analysis, Conceptual understanding |
| 2025 | Factual recall, Multi-statement analysis |
| 2018 | Statement-based questions, Conceptual understanding |
| 2017 | Multi-statement analysis, Institutional roles and functions |
| 2017 | Conceptual understanding, Cause and effect relationships |
| 2015 | Factual recall, Purpose or function of a policy tool |
| 2014 | Multi-statement analysis, Conceptual understanding |
Timeline
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Indian Economy
Conceptual area
-
Prelims 2014
Multi-statement analysis, Conceptual understanding
-
Prelims 2015
Factual recall, Purpose or function of a policy tool
-
Prelims 2017
Multi-statement analysis, Institutional roles and functions
-
Prelims 2017
Conceptual understanding, Cause and effect relationships
-
Prelims 2018
Statement-based questions, Conceptual understanding
-
Prelims 2025
Factual recall, Multi-statement analysis
-
Prelims 2026
Multi-statement analysis, Conceptual understanding
-
Prelims 2026
Multi-statement analysis, Conceptual understanding
-
A future of financial health for every Indian
India's DPI, built on Aadhaar, UPI, and Jan Dhan, is a robust digital ecosystem enabling scalable financial services. It integrates welfare schemes, enhances financial capability, and promotes deeper inclusion and health, crucial for India's digital transformation and inclusive growth.
See also
Past papers
2014–2026 · 8 questions
In the news
A future of financial health for every Indian
India's DPI, built on Aadhaar, UPI, and Jan Dhan, is a robust digital ecosystem enabling scalable financial services. It integrates welfare schemes, enhances financial capability, and promotes deeper inclusion and health, crucial for India's digital transformation and inclusive growth.
Try these PYQs
Pradhan Mantri Jan Dhan Yojana has been launched for -
PMJDY is a National Mission on Financial Inclusion encompassing an integrated approach to bring about comprehensive financial inclusion of all households in the country. The plan envisages: - Universal access to banking facilities with at least one basic banking account for every household.
- Financial literacy.
- Access to credit.
- Insurance and pension facility.
With reference to digital payments, consider the following statements:
1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.
Which of the statements given above is/are correct?
Statement 1 is correct: Bharat Interface for Money (BHIM) is a payment app that lets you make simple, easy, and quick transactions using Unified Payments Interface (UPI). You can make direct bank payments to anyone on UPI using their UPI ID or scanning their QR with the BHIM app. You can also request money through the app from a UPI ID. Statement 2 is not correct: From a consumer point of view, three levels of authentication are required in this app. 1. The device ID and mobile number,
2. The bank account which you are linking to this app, and
3. The UPI Pin which is needed to complete the transaction. There are three factors of authentication versus a normal net banking app or a chip-in debit card which will only have two factors of authentication.
Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is **not** correct?
Option A is a correct statement: UPI is a real-time payment interface that facilitates the transfer of fiat money already held in bank accounts. The Digital Rupee (e₹) is actual sovereign digital currency (legal tender) issued by the Reserve Bank of India (RBI), functioning as the digital equivalent of physical paper cash. Option B is a correct statement: In UPI, settlement for end users happens instantly as the money gets immediately debited or credited (with backend inter-bank settlement). In the case of the Digital Rupee, transactions occur directly between digital wallets. The transfer of the e₹ token itself provides instantaneous finality of settlement (exactly like handing over physical cash), bypassing bank intermediation and eliminating the need for a separate settlement process. Option C is a correct statement: Because UPI transactions are routed through bank accounts, every transaction is recorded in the user's bank statement. Digital Rupee transactions are wallet-to-wallet; therefore, individual peer-to-peer transfers do not reflect in bank statements (only the initial loading or unloading of the e₹ wallet from a bank account is recorded). Option D is an incorrect statement: Money transferred via UPI is commercial bank money; hence, the liability lies with the respective commercial banks. The Digital Rupee, however, is a Central Bank Digital Currency (CBDC) and represents a direct liability of the RBI, guaranteed by the sovereign, not the commercial banks. Therefore, Option D is the correct answer.
Consider the following countries:
I. United Arab Emirates
II. France
III. Germany
IV. Singapore
V. Bangladesh
How many countries amongst the above are there other than India where international merchant payments are accepted under UPI?
Unified Payments Interface (UPI) is expanding internationally, but only a few countries currently support international merchant payments under UPI. ✅ I. United Arab Emirates – Correct
* UPI is accepted at select merchants in the UAE via NPCI partnerships. ✅ II. France – Correct
* France allows UPI merchant payments at select tourist locations, like the Eiffel Tower. ❌ III. Germany – Incorrect
* No official rollout of UPI for merchant payments in Germany as of now. ✅ IV. Singapore – Correct
* UPI is live for both P2P remittances and merchant payments in Singapore. ❌ V. Bangladesh – Incorrect
* UPI is not yet operational for merchant payments in Bangladesh. International merchant payments are accepted under UPI in seven countries outside of India: Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka, and the UAE.
Which of the following is the most likely consequence of implementing the ‘Unified Payments Interface (UPI)’?
Statement (a) is correct: UPI enables direct bank-to-bank transfers through mobile apps, removing the need for intermediate mobile wallets. Statement (b) is incorrect: UPI promotes digital transactions, but it will not completely replace physical currency in the near future. Statement (c) is incorrect: UPI deals with domestic payment systems and has no direct impact on FDI inflows. Statement (d) is incorrect: Direct Benefit Transfer (DBT) uses Aadhaar-linked bank accounts, not UPI, as the main mechanism for subsidy distribution.
Show 3 more PYQs
Which of the following statements about Real-World Assets (RWA) Tokenization are correct?
1. Tokenization is the process of turning real world assets into digital tokens using blockchain technology.
2. Tokenization of real world assets offers 24x7 access, promoting financial inclusion.
3. Tokenization of real world assets will allow the access to high growth investment opportunities for individuals in India.
Select the answer using the code given below:
Statement 1 is Correct: Real-World Asset (RWA) Tokenization is the process of converting the ownership rights of physical or traditional financial assets (such as real estate, gold, commodities, or bonds) into digital tokens on a distributed ledger or blockchain. Each token represents a proportional share or claim on the underlying asset. Statement 2 is Correct: Unlike traditional financial markets and real estate registries that have fixed operating hours, geographic limitations, and settlement delays, blockchain-based tokenized assets can be traded globally, 24 hours a day, 7 days a week, with near-instant settlement. Additionally, tokenization allows high-value, traditionally illiquid assets to be divided into smaller, affordable fractions. This lowers the barrier to entry, enabling retail investors and underserved populations to participate in wealth-building markets, thereby directly promoting financial inclusion. Statement 3 is Correct: In the Indian context, RWA tokenization democratizes access to high-growth, capital-intensive sectors (like commercial real estate, agricultural land, and infrastructure projects). Regulatory bodies like the IFSCA (in GIFT City) have already begun approving tokenization platforms under regulatory sandboxes to unlock these previously inaccessible investment opportunities for everyday Indian retail investors. Therefore, all three statements are correct, making the correct option A.
What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas?
1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages.
2. It enables the beneficiaries in rural areas to make deposits and withdrawals.
Select the correct answer using the code given below.
Business Correspondents (BCs) or Bank Saathis are agents appointed by banks to provide basic banking services in rural and unbanked areas where setting up a full-fledged branch might not be feasible. They act as a bridge between the bank and the local population, offering essential financial services Statement 1 is correct: BCs can help villagers access government subsidies and social security benefits electronically deposited into their accounts. This eliminates the need to travel long distances to banks and reduces the risk of cash handling. Statement 2 is correct: Villagers can deposit their savings or withdraw cash through BCs, promoting financial inclusion and facilitating small transactions without requiring them to visit a bank branch. Therefore, both options (1 and 2) are the facilities that beneficiaries can avail through Business Correspondent services.
Consider the following statements:
1. National Payments Corporation of India (NPCI) helps in promoting financial inclusion in the country.
2. NPCI has launched RuPay, a card payment scheme.
Which of the statements given above is/are correct?
Statement 1 is Correct: The National Payments Corporation of India (NPCI) was established to facilitate retail payments and promote financial inclusion in India. They achieve this by
1. Developing and deploying innovative payment infrastructure like RuPay cards, UPI, etc.
2. Enabling participation of a wider range of players in the payments system, including non-bank entities.
3. Setting standards and guidelines to ensure secure and efficient electronic payments. Statement 2 is Correct: RuPay is a domestic debit and credit card payment network launched by NPCI in India. It provides an alternative to international card networks like Visa and Mastercard. This domestic network can potentially lower transaction costs for merchants and banks compared to international schemes. Therefore, both statement 1 and statement 2 are correct.
Hence, option C is the correct answer.