New Delhi: The Unified Payments Interface (UPI), since its launch in 2016, has massively transformed financial access in the country, enabling 300 million people and 50 million merchants to conduct seamless digital transactions. has been enabled, and by October last year, 75% of retail digital payments in India were made through UPI, according to a research paper published on Saturday.
The paper prepared by professors from IIM and ISB states, “Within a short period of time, UPI has grown rapidly in digital payments across India and is used at every level from street vendors to large shopping malls. goes.”
UPI has enabled underserved groups, including subprime and new borrowers, to access formal credit for the first time, the paper said. “In regions with high UPI adoption, loans to new borrowers grew by 4%, and by 8% to subprime borrowers,” the paper said, adding that the average fintech loan size was Rs 27,778 – nearly sevenfold. . Rural monthly expenses
Fintech lenders scaled rapidly, increasing their loan volume by 77 times, surpassing traditional banks in serving smaller, underserved borrowers, the authors said.
The rapid adoption of UPI was made possible by affordable internet across the country.
According to the newspaper, “The affordability of digital technology played a crucial role, enabling widespread adoption of UPI in rural and urban areas alike.”
The authors highlighted how adoption of UPI helped credit growth. It said a 10% increase in UPI transactions led to a 7% increase in credit availability, showing how digital financial history enabled lenders to better assess borrowers. “Between 2015 and 2019, fintech lending to subprime lenders grew at a pace comparable to that of banks, with fintechs growing in areas with high UPI usage,” the paper said.
It also highlighted the fact that the default rate has not increased despite the increase in credit. This shows that UPI-enabled digital transaction data helped lenders expand responsibly.
The success of UPI has global implications and India can play an important role in helping other countries adopt the technology, the authors said.