India's digital payments landscape has experienced significant growth, driven by the government's DIGIDHAN mission. The total volume of digital payments in the country has expanded from 2,071 crore transactions in FY 2017-18 to 22,831 crore in FY 2024-25, exhibiting a compound annual growth rate (CAGR) of 41 percent. The value of these transactions has also increased substantially from Rs 1,962 lakh crore to Rs 3,509 lakh crore during the same period.
A key contributor to this growth has been the Unified Payments Interface (UPI). UPI transactions have surged from 92 crore in FY 2017-18 to 18,587 crore in FY 2024-25, which is a CAGR of 114 percent. The value of UPI transactions has also seen a remarkable rise, from Rs 1.10 lakh crore to Rs 261 lakh crore during the same period. In FY 2023-24, UPI captured approximately 70% of the total digital payment transactions.
The government has been actively promoting digital payments and strengthening the digital payments ecosystem through the DIGIDHAN mission. An incentive scheme has been in place since FY 2021-22 to encourage banks and other stakeholders to promote digital payments, including UPI. The "Incentive Scheme for the promotion of RuPay Debit Cards and low value BHIM-UPI transactions Person to merchant (P2M)" has significantly contributed to the growth of digital payments in the country. As a result, the number of banks offering digital payments, including UPI payments, has increased from 216 in FY 2021-22 to 572 in FY 2023-24.
To further boost digital payments, a dedicated Incentive Scheme for Banks (ISB) portal has been developed to create awareness and ensure seamless data collection. The government and the Reserve Bank of India have also introduced multiple reforms to strengthen credit discipline, responsible lending, governance, technological adoption, and the regulation of cooperative banks.
In addition to promoting digital payments, the government has focused on reforms in public sector banks (PSBs). These include the arms-length selection of top management through the Financial Services Institutions Bureau, the appointment of non-executive chairpersons in nationalized banks, widening the talent pool, and performance-based extensions for managing directors. The Enhanced Access and Service Excellence (EASE) reforms have enabled measurable progress across governance, risk management, technology-driven banking, and human resources in PSBs.
The government is also working to boost credit flow to Micro, Small and Medium Enterprises (MSMEs). Schemes like the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) and the Emergency Credit Line Guarantee Scheme (ECLGS) have been implemented. Following the Union Budget 2024-25, a New Credit Assessment Model for MSMEs was launched, leveraging digitally verifiable data and automated loan appraisal processes. Additionally, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) provides guarantee cover on loans up to Rs 10 crore extended by eligible lending institutions to micro and small enterprises.
