Blitz Bureau
NEW DELHI: The Unified Payments Interface (UPI) has achieved 15,547 crore transactions worth Rs 223 lakh crore from January to November this year, “showcasing its transformative impact on financial transactions” in India, the Finance Ministry said on December 14.
It also said that UPI is now accepted in seven countries, including France, UAE, Singapore, Sri Lanka, Mauritius, Bhutan and Nepal. The UPI system provides a cheaper and quicker alternative to the available channels of cross-border remittances.
UPI has succeeded in increasing financial inclusion and promoting equitable economic growth by enabling underserved groups, including subprime and new-to-credit borrowers to access formal credit for the first time, according to a new study by IIM and ISB professors.
The authors said the success of UPI can be replicated in other countries as well and India can play a leading role in helping them adopt the fintech system. “Within a short span, UPI led to exponential penetration of digital payments across India and is used at all levels from street vendors to large shopping malls,” they said.
Since its launch in 2016, UPI has transformed financial access in India, enabling 300 million individuals and 50 million merchants to perform seamless digital transactions, said the study.
By October 2023, 75 per cent of all retail digital payments in India were through UPI. The rapid adoption of UPI was possible due to affordable internet across the country. A 10 per cent increase in UPI transactions led to a 7 per cent rise in credit availability, reflecting how digital financial histories enabled lenders to assess borrowers better,” the study states.
The authors said fintech lenders scaled rapidly, increasing their loan volumes 77 times, far outpacing traditional banks in catering to smaller, underserved borrowers.
The study also highlights that despite the credit surge, default rates did not rise, showing that UPI-enabled digital transaction data helped lenders expand responsibly.
