The Unified Payment Interface, UPI, which first overtook card payments in FY20, continued on an upward trajectory in FY21 as well, showing significant growth in both value and volume.

These were the findings of the annual report published this week by the Microfinance Institutions Network (MFIN), a trade body for the microfinance industry.

According to the RBI-introduced Composite Financial Inclusion Index, which uses three differently weighted parameters—access (with 35% weightage), usage (45%), and quality (20%)—to capture the extent of financial inclusion across the country, India scored 53.9 (on a scale of 0 to 100) for the period ended March 2021, compared with 43.4 for the period ended March 2017.

The number of Jan Dhan Accounts in October 2021 grew to 436.4 million, with women account holders at 55.6%. About 67% accounts were operative. The average deposit held in these accounts stood at ₹3,400, a significant increase from ₹1,279 in 2015.

The report revealed a significant variation in the extent of inclusion among regions and states. Kerala topped the list with a score of 90.9, while Bihar ranked at the bottom with 38.5 (rank 32).

In value terms, digital payments in India rose 30.19% in FY21, compared with the previous fiscal.

The Aadhaar Payment Bridge System (APBS), used for credit transactions for government disbursements, showed stagnancy in terms of volume, but grew by 24% in value compared to 2019. The proportion of UPI transactions in total volume of digital transactions grew from 23% in 2018-19 to 51% in 2020-21, compared to a decrease in the proportion of National Electronic Funds Transfer (NEFT) transactions from 10% to 7%.

The average value of transactions for UPI was ₹1,838 and ₹81,256 for NEFT in 2020-21, in an indication that UPI is driving the growth of small-value digital transactions.

Digital payments recorded a growth of 22% during 2020-21 in terms of volume on top of a 32% growth in the previous year.

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