A recent government study highlights UPI’s role in reshaping financial access, linking digital payments growth to improved credit availability for underserved groups.
Unified Payments Interface (UPI), a ground-breaking digital payment system introduced in recent years, has redefined financial inclusion in India. A recent government study highlights UPI’s transformative impact, revealing a direct correlation between increased UPI transactions and enhanced credit availability.
The study found that a 10% rise in UPI transactions led to a 7% boost in credit access, empowering lenders with robust digital financial histories to assess borrowers effectively. Underserved groups, including subprime and new-to-credit borrowers, benefited the most. High UPI adoption regions reported a 4% rise in loans for new borrowers and an 8% increase for subprime individuals.
Fintech lenders played a pivotal role, scaling their loan volumes significantly faster than traditional banks. By leveraging UPI's digital framework, they extended smaller, accessible loans to a broader audience, with an average loan size around seven times the monthly rural expenditure.
