UPI Transactions Reach ₹223 Lakh Crore from January to November
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New Delhi, Dec 14 (NationPress) The Unified Payments Interface (UPI) has recorded 15,547 crore transactions valued at ₹223 lakh crore from January to November of this year, demonstrating its transformative influence on financial transactions in India, as stated by the Finance Ministry on Saturday.
The Finance Ministry also indicated that UPI is now recognized in seven nations, which include France, UAE, Singapore, Sri Lanka, Mauritius, Bhutan, and Nepal. The UPI framework offers a more economical and swift alternative to existing channels for cross-border remittances.
According to a recent study conducted by professors from IIM and ISB, UPI has effectively enhanced financial inclusion and fostered equitable economic progress by allowing underserved demographics, including subprime and new-to-credit borrowers, to access formal credit for the first time.
The researchers noted that the achievements of UPI could be replicated in other nations, positioning India as a potential leader in assisting these countries in adopting the fintech system.
“In a relatively brief period, UPI has resulted in exponential growth of digital payments throughout India, being utilized by everyone from street vendors to large shopping centers,” they stated.
Since its inception in 2016, the Unified Payments Interface (UPI) has revolutionized financial accessibility in India, allowing 300 million individuals and 50 million merchants to conduct seamless digital transactions, as reported by a study from IIM and ISB professors.
By October 2023, 75 percent of all retail digital payments in India were processed through UPI. The swift adoption of UPI can be attributed to the availability of affordable internet across the nation. A 10 percent increase in UPI transactions resulted in a 7 percent rise in credit availability, demonstrating how digital financial histories have enabled lenders to better evaluate borrowers, according to the study.
The study also revealed that fintech lenders have rapidly expanded, increasing their loan volumes by 77 times, significantly surpassing traditional banks in serving smaller, underserved borrowers.
Despite the surge in credit, the study highlighted that default rates remained stable, indicating that UPI-facilitated digital transaction data has enabled lenders to expand their services responsibly.
To promote greater financial inclusion, the RBI recently announced its decision to allow small financial banks (SFBs) to extend pre-sanctioned credit lines through the UPI.
In September 2023, the scope of the Unified Payments Interface (UPI) was broadened to enable pre-sanctioned credit lines to be linked via UPI and utilized as a funding account by Scheduled Commercial Banks, although Payments Banks, Small Finance Banks (SFBs), and Regional Rural Banks were excluded from this provision.
“The credit line on UPI presents the opportunity to offer low-ticket, low-tenor products to ‘new-to-credit’ customers. SFBs utilize a high-tech, low-cost model to reach the last-mile customer and can play a crucial role in expanding credit access via UPI,” stated the RBI.
“Thus, it is proposed to allow SFBs to extend pre-sanctioned credit lines through UPI. Relevant guidelines will be issued shortly,” the RBI's statement further noted.
