Credit Access: With the increasing reach of the Unified Payment Interface (UPI) in the country, the number of people taking loans for the first time is increasing. Information about this was given in a research paper. The paper prepared by professors of IIM and ISB said that UPI, launched in 2016, has brought a big change in the financial sector of the country. By October last year, more than 30 crore people and more than 5 crore merchants were connected to it. 75 percent of the total retail digital transactions in the country are being done through UPI.

Had a big impact on the country's financial system

The study further said that in this short period, UPI has made a big impact on the country's financial system and it is being used from street vendors to big shopping malls. According to the paper, UPI has helped in expanding the service to the concerned people, which includes subprime and first-time formal loan takers. The paper said, 'In the areas where UPI has a high reach, the number of first-time loan takers has increased by 4 percent and the number of subprime borrowers has increased by 8 percent. Apart from this, the average size of fintech loan in these areas is Rs 27,778, which is about 7 times more than the rural monthly expenditure.'

Fintech loan companies expanded rapidly
The authors said that due to the reach of UPI, fintech loan companies expanded rapidly, increasing their loan volume by 77 times and they are far ahead of traditional banks in terms of lending to small, underprivileged borrowers. Also said that a major reason behind the rapid adoption of UPI in the country is the availability of affordable internet. The authors highlighted that the adoption of UPI has led to a significant increase in loan growth.

A 10 percent increase in UPI transactions led to a 7 percent increase in loan availability, showing how financial history has enabled loan companies to better evaluate borrowers. The paper also stressed that despite the increase in loans, the default rate has not increased, showing that data related to UPI transactions has helped fintech companies expand responsibly.