Banks, FinTechs Should Use UPI Data To Expand Credit Access For MSMEs: NITI Aayog VC

New Delhi, Sept 10 (KNN) Banks and FinTech companies should make greater use of UPI transaction data to assess creditworthiness and bring more micro enterprises and MSMEs into the formal lending system, NITI Aayog Vice-Chairman Ashok Lahiri said.

India’s credit-to-GDP ratio stands at only 53-55 per cent, compared with around 150-170 per cent in developed economies, indicating significant headroom to deepen formal credit access, particularly for smaller businesses, Lahiri said while speaking at the Global Fintech Fest 2026.

He said digital transaction data can make credit appraisal and risk assessment more efficient and enable lenders to extend credit to more creditworthy borrowers, reported Money Control.

Lahiri noted that non-performing assets in the banking sector are currently low, but lenders may have become overly cautious in extending credit.

“We need more credit to creditworthy people with risk evaluation,” he said, adding that credit expansion need not compromise asset quality if supported by better risk assessment.

India Needs Greater Manufacturing Scale

On manufacturing, Lahiri identified inadequate scale compared with competitors such as China as India’s biggest structural challenge.

While recent GDP data shows an increase in manufacturing’s share of the economy, India needs substantially greater manufacturing capacity to enable the sector to prosper, he said.

Investment currently accounts for around 30-34 per cent of GDP, about 10 percentage points below levels seen in China and South Korea, Lahiri said. Much of the investment requirement would need to be financed through domestic savings, while exports would provide an additional source of demand.

He said foreign direct investment (FDI) is important not only for capital but also for access to global value chains, manufacturing scale and technology.

Global uncertainties, including tariff weaponisation, the weakening of the World Trade Organization system and disruptions caused by artificial intelligence (AI), have affected investor sentiment, Lahiri said. However, he expressed confidence that India would regain momentum.

Industry-Government Partnership Needed For Skilling

Lahiri also called for closer government-industry collaboration in skill development, with companies clearly defining the skills they require.

He suggested that skill-development centres should operate more like apprenticeship programmes, where companies take trainees, provide stipends and training, and eventually absorb them into their workforce.

The private sector should also have a greater role in curriculum design so that training outcomes are aligned with actual industry requirements, he said.

PPP Can Support Infrastructure Financing

On infrastructure, Lahiri said selected segments could be developed through public-private partnerships (PPPs), with a larger role for the financial sector.

He stressed the need for long-term risk capital but said risks could be managed through appropriately structured agreements.

“There are miles to go in PPP,” Lahiri said, while noting that emerging “green shoots” in the model could help address India’s infrastructure bottlenecks.

(KNN Bureau)