UPI Transaction Data Can Help Expand Formal Credit Access For MSMEs: NITI Aayog VC

New Delhi, Oct 16 (KNN) NITI Aayog Vice Chairman Ashok Lahiri on Wednesday called for leveraging transaction data generated through the Unified Payments Interface (UPI) to improve credit assessment and bring informal businesses, particularly micro, small and medium enterprises (MSMEs), into the formal credit system.

UPI Data To Improve Credit Assessment

Speaking at the Global Fintech Fest, Lahiri said UPI transaction data could help banks assess borrowers more effectively, price risks accurately and extend credit to small businesses traditionally excluded from formal lending.

He said India needs to find ways to integrate the informal sector into the financial system by using the growing volume of digital payment data for credit assessment and risk pricing, reported Business Standard.

Lahiri noted that credit assessment is a key responsibility of bank managers, but access to financial transaction data could make the process more effective by providing insights into borrowers' financial behaviour.

Investment Rate Needs To Rise

Lahiri also said India would need to increase its investment rate to achieve its goal of becoming a developed economy.

He noted that the investment rate, which had been around 30 per cent of gross domestic product (GDP), had risen to approximately 34 per cent based on first-quarter data.

(KNN Bureau)