UPI transactions in India, which is the leading instrument for the consumer FinTech sector in the country, stands at a juncture to grow at 22 percent cumulative growth rate to hit total transaction volume of Rs 6.2 lakh crore (USD 84 billion) by 2025, said Rajesh Bansal, chief executive of the Reserve Bank Innovation Hub (RBIH). Speaking at a keynote session of the Global FinTech Festival that opened earlier today, Bansal underlined key areas of growth that the Indian digital payments and FinTech sector can cash in to grow in the immediate future, and committed to the RBIH’s plans to be an enabler in this sector for nascent startups.
Highlighting key data points in the UPI transactions scheme of things, Bansal stated how today, 81 percent, or four out of every five UPI transactions done today, are conducted as P2P transactions – or between two individuals. This, Bansal highlighted, leaves massive scope for the business end to adopt digital payments, thereby backing up his growth projection for the digital payments sector. Even among users, Bansal claimed as per RBIH data that only 43 percent of all urban and rural internet users are active on the internet, and only 46 percent of this subset of the Indian population are using digital payments actively.
Bansal further stated that even with just about one fifth of the Indian population actively transacting digitally, the nation’s total volume of UPI transactions today stand at Rs 2.29 lakh crore (USD 31 billion). Despite this, Bansal stated that India today lags behind most of the 37 other nations that are part of the global Organisation for Economic Cooperation and Development (OECD), in the cash to GDP ratio. “While most OECD nations have a cash to GDP ratio of less than 5 percent, the same ratio for India today stands at 14.1 percent. This is too high, but at the same, showcases the massive scope of growth that players in the FinTech space can cash in on, in the near future,” Bansal said.
In conversation with Suniti Nanda, ex-FinTech Officer for the Government of Maharashtra, Bansal highlighted the need for instant credit among micro entrepreneurs and enterprises as a key area that FinTech players must focus on in terms of the growth scope. “There are over 70 million (7 crore) dairy farmers in India, and over 80 million (8 crore) beneficiaries of government schemes such as the Pradhan Mantri Ujjwala Yojana. Furthermore, only a mere 8 percent of all micro, small and medium enterprises (MSMEs) today have instant credit access – which clearly highlights the massive scope of growth for companies in this segment,” Bansal added.
Bansal further highlighted target consumers such as the over 11 crore individuals enrolled in the PM-Kisan scheme, and a startling highlight that claimed how over 50 percent of women in India only make limited use of their bank accounts, as key areas of growth for FinTech players in the country. To support these players, Bansal underlined the setting up of a main Bengaluru office and a secondary Mumbai office for the RBIH, and stated that the body will work as an enabler of processes and offer assistance to FinTech businesses in the near future.