New Delhi, Dec 8 (NationPress) India’s Unified Payments Interface (UPI) has achieved remarkable success in enhancing financial inclusion and fostering equitable economic growth by allowing underserved populations, such as subprime and new-to-credit borrowers, to obtain formal credit for the first time, according to a recent study conducted by professors from IIM and ISB.

The researchers noted that the achievements of UPI can be mirrored in other nations, positioning India as a potential leader in guiding them towards adopting this fintech solution.

"In just a brief period, UPI has facilitated an unprecedented surge in digital payment adoption throughout India, catering to a wide range of users from street vendors to large retail outlets," the report authored by IIM and ISB professors stated.

Since its inception in 2016, the Unified Payments Interface (UPI) has revolutionized financial access in India, enabling 300 million users and 50 million merchants to conduct seamless digital transactions, the study indicates.

By October 2023, a striking 75 percent of all retail digital transactions in India were facilitated through UPI. This swift adoption was aided by the availability of affordable internet services nationwide.

"The cost-effectiveness of digital technology was essential, allowing for extensive UPI usage in both rural and urban settings," the study emphasizes.

The research also revealed that a 10 percent increase in UPI transactions correlated with a 7 percent increase in credit availability, illustrating how digital financial records enabled lenders to evaluate borrowers more effectively.

"From 2015 to 2019, fintech loans extended to subprime borrowers surged to levels comparable to those offered by traditional banks, with fintech companies flourishing in regions with high UPI utilization," the study noted.

The authors highlighted that fintech lenders experienced rapid growth, with their loan volumes expanding by a staggering 77 times, significantly outpacing conventional banks in serving smaller, underserved clients.

Additionally, the study points out that despite the increase in credit, default rates remained stable, indicating that UPI-enabled digital transaction data empowered lenders to expand their services responsibly.