\u201cWe have a large uncatered market for credit,\u201d NPCI chief executive Dilip Asbe told the Financial Times, adding it was also exploring the facilitation of investments and insurance. \u201cUPI is now the infrastructure layer to provide the whole financial services business.\u201d<\/p>\n
UPI, which facilitates instant money transfers between bank accounts in India<\/a>, has exploded in popularity since its launch in 2016 and now rivals Visa in terms of number of transactions, processing more than 600mn a day in July.<\/p>\n The system is part of the government\u2019s India Stack<\/a>, a set of digital tools that allows the country\u2019s 1.4bn people to prove their identity, access benefits and make payments on their phone.<\/p>\n Bank account ownership has risen significantly in India to 89 per cent in 2024, from 53 per cent a decade earlier, according to the World Bank, partly driven by Prime Minister Narendra Modi\u2019s push to transfer cash to the poor directly into their accounts<\/a> starting in 2014.<\/p>\n However, 16 per cent of accounts are not active, compared with the 4 per cent average of other low- and middle-income economies. And while users have grown accustomed to using UPI for daily transactions and money transfers, its facilitation of credit remains limited, said Asbe.<\/p>\n Banks can now link credit lines, including loans backed by gold, property, fixed deposits, shares and mutual funds, to users\u2019 UPI apps. From the end of August, the disbursed money can then be used for merchant payments, peer-to-peer transfers or cash withdrawals.<\/p>\n Because credit lines through UPI remain a relatively new product, many banks \u201cwill have to upgrade their platforms\u201d, said Asbe. \u201cWe need investment by banks and fintechs to get more consumers and merchants on UPI.\u201d<\/p>\n India Business Briefing<\/p>\n The Indian professional\u2019s must-read on business and policy in the world\u2019s fastest-growing big economy. Sign up for the newsletter here<\/a><\/p>\n However, many of the customers that it wants to attract are not natural drawers of formal credit and are more likely to borrow from friends and family, while wealthier UPI users and businesses already have established relationships with banks, said Neil Shah, co-founder of technology consultancy Counterpoint Research.<\/p>\n The World Bank estimated that only 15 per cent of India\u2019s population borrowed formally last year, compared with the 24 per cent global average.<\/p>\n \u201cIf you don\u2019t see that entity as a lending or a borrowing type institution then it definitely gives fewer opportunities for [UPI] to expand into those kinds of instruments,\u201d said Shah. \u201cIt will take time for them, and the onus will also be on the banks to push that in terms of credibility.\u201d<\/p>\n The ambitions also come as the country\u2019s financial sector is recovering from a wave of delinquencies<\/a> following a boom in unsecured retail lending. Loans surged more than 30 per cent year on year in 2023 before the Reserve Bank of India moved to curb activity.<\/p>\n Recommended<\/p>\n![\"Line](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/08\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/52eaf9a0-70e8-11f0-8623-e393f1c29580-standard.png\")
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