World Bank stuck on UPI
According to a World Bank document, UPI transactions were worth almost 50% of India’s nominal GDP in the last financial year. Digital payment infrastructure has almost eliminated banks’ expenditure on new customers. It said that with the use of DPI, the cost of onboarding banks’ customers in India has come down from $23 (about Rs 1,900) to $0.1 (about Rs 8).
The report said, “UPI has been widely adopted, benefiting from user-friendly interface, open banking features and private sector participation. The UPI platform has gained immense popularity in India; In May 2023 itself, there were 9.41 billion transactions, which were worth about Rs 14.89 lakh crore. The total value of UPI transactions for the financial year 2022-23 was about 50% of India’s nominal GDP.
Huge savings to India from DBT
The report notes that India has leveraged DPI to build the world’s largest Direct Benefit Transfer (DBT) infrastructure over the past decade. The report says, ‘This initiative facilitated transactions of $ 361 billion (about Rs 30 thousand billion) directly into the accounts of beneficiaries through 312 major schemes from 53 central ministries. By March 2022, this has led to a total saving of $33 billion (about Rs 2,738 billion), which is equivalent to about 1.14% of GDP.’
World Bank praised in G20 document
The World Bank has prepared the GPFI document as an implementing partner of the Global Partnership for Financial Adjustment (GPFI). This includes information provided by the Finance Ministry of India and the Reserve Bank of India (RBI). India is also going to tell the story of its successes on the front of digital payments and financial inclusion in the G20 summit.
Digital payment infrastructure saved India 41 years!
The World Bank report states that India has created an excellent digital payment infrastructure by combining systems like digital ID, inter-communication payments, digital credentials ledger and account aggregation. “It has achieved a tremendous financial inclusion rate of 80% in six years,” the report said. This is an achievement that would have taken almost five decades to achieve without the initiative of DPI.
Jan Dhan account increased three times
The number of Pradhan Mantri Jan-Dhan Yojana (PMJDY) bank accounts has more than tripled since its launch. There were 14.72 crore Jan Dhan bank accounts in March 2015, which has increased to 46.20 crore by June 2022. Of these, 56% i.e. more than 26 crore bank accounts are of women. This suggests that the role of DPI in this ‘leap’ is unmistakable, but that of the other ecosystems it is based on is quite significant. It has been said in the document that the fast payment system (FPS) like UPI has taken root very fast in India.
Private institutions also benefit a lot from DPI
The report also said that digital payment infrastructure can increase the efficiency of private organizations, thereby reducing complexity, cost and time in business operations. The account aggregator ecosystem for some non-bank financial companies (NBFCs) in India led to 8% higher conversion rates in SME loans, 65% savings in depreciation costs and 66% reduction in fraud detection costs.
The World Bank report says, ‘According to industry estimates, the cost of onboarding banks’ customers in India has reduced from $23 to $0.1 through the use of DPI. India’s stack has digitalized and simplified KYC processes, reducing costs; Banks using e-KYC have reduced the cost of compliance from $0.12 to $0.06.’