Next, UPI is set to enable ‘sachetisation’ of credit in India

Dilip Asbe, the MD and CEO of National Payment Corporation of India (NPCI) said today that there is an opportunity to grow the credit card or retail loans market 10 times in the coming years. 

“Sachetisation of credit is going to come in. Credit as a service is going to come,” said Asbe, who is credited with building the UPI volumes. Asbe was referring to banks and NBFCs offering small-ticket credit facilities to the public. 

In a fireside chat at Global Fintech Fest, Asbe said the NPCI is working with the top banks like HDFC, ICICI, SBI and others. “We are now looking at a complete digital journey. This reduces acquisition, onboarding, and underwriting costs to a very minimal level. The customer is real-time connected,” he said. 

“There is an opportunity to grow the credit card market 10x,” he added.  The current credit card outstanding in the market is Rs 2.13 lakh crore, which is very low despite having credit card facility for decades.  

In fact, there are only 8 million credit cardholders in India. The inadequate infrastructure of POS (point of sales machines), which is also expensive, is one of the reasons. But the high cost of acquiring creditworthy customers and the high default rate in the system also makes it difficult to reach out to everyone in the market. 

But with the data generated by UPI debit and other tools in the market, there is now a possibility to increase credit penetration. The low-cost transaction processing via QR code will also facilitate credit growth in the market, especially in non-urban and rural markets.

Last September, the Reserve Bank of India (RBI) allowed the linking of credit cards to UPI for only RuPay credit cards. Once the card is linked, a customer can scan the merchant QR code and make a payment, just like UPI debit transactions. There are expectations of global networks like Visa, MasterCard and Amex to join the UPI credit card platform. 

This week, the RBI has also allowed UPI for pre-sanctioned limits issued by the banks. 

“India is now a digital society,” said Asbe. UPI, launched eight years ago, is currently used by 350 million customers for debit cards or bank transfers from one account to another, with 10 billion transactions taking place in a month. “The banks already have a lot of data on customers. We have to leverage this opportunity in a very responsible way,” said Asbe. 

“The step up in credit is possible now,” he added.