UPI payment records could help informal micro, small and medium enterprises (MSMEs) qualify for formal loans by giving lenders evidence of real business cash flow. Ashok Lahiri, Vice-Chairman of NITI Aayog, said at the Global Fintech Fest that India should use the transaction data generated through UPI to improve credit appraisal, price risk more accurately and bring informal businesses into the formal financial system.
Why UPI data matters for small businesses
Many MSMEs operate with limited bookkeeping, few audited statements or little credit-bureau history. A lender may therefore struggle to distinguish a viable business from a risky one, especially when the borrower cannot offer substantial collateral. This information gap can lead to loan rejection, conservative limits or interest rates that do not reflect the business’s actual performance.
As an Amazon Associate I earn from qualifying purchases.
Regular UPI receipts can provide a dated, digital record of money collected from customers. When the pattern is consistent, the history may help a lender estimate sales volume, seasonality and operating cash flow. That can support flow-based underwriting, in which repayment capacity is assessed from business inflows rather than collateral alone.
Lahiri described the policy objective this way: “India needs to incorporate the informal sector in the financial sphere and find ways to use rich data which UPI is throwing, for credit appraisal and better pricing of risk and including the informal sector particularly MSMEs in the formal credit system.”
#1 Best Overall
What the published figures show
The scale of India’s digital-payment network means that UPI can generate records even where conventional financial documentation is thin. NITI Aayog reported that only 20% of MSMEs had access to formal credit as of 2023.
| Measure | Reported figure | Qualification |
|---|---|---|
| UPI transaction value | INR 920 million in FY 2017–18 | Figure reported by NITI Aayog in 2026 |
| UPI transaction value | INR 83.75 trillion in FY 2022–23 | NITI Aayog reported a 147% compound annual growth rate over the cited period |
| UPI activity | INR 80.79 trillion across 55.66 billion transactions | First four months of FY 2024–25, according to NITI Aayog |
| Digital transactions | Nearly 11 times higher from 2021 to 2025 | Ministry of Finance figure; UPI represented about 80% of total digital transactions |
| MSMEs with formal-credit access | 20% | NITI Aayog estimate for 2023 |
These numbers demonstrate the volume of potentially usable records and the size of the inclusion gap. They do not prove that UPI data by itself increases approval rates, lowers interest costs or improves repayment outcomes for every borrower.
Rank #2
- Ideal for Gifting
- Ideal for a bookworm
- Compact for travelling
How a lender could use a UPI history
- Collect consent. The business authorizes access to relevant financial information. A lender should not treat a merchant’s QR code or account activity as open-ended permission to inspect unrelated data.
- Verify the payment stream. The lender can examine the frequency, amount and continuity of incoming transactions, while checking for reversals, unusual spikes, duplicate entries or signs that the account is being used for another business.
- Estimate cash flow. Inflows can be assessed alongside expenses, seasonality and existing obligations. Gross UPI receipts are sales evidence, not automatically net profit or available repayment capacity.
- Combine records where available. Account Aggregator infrastructure can let a consenting business share GST information, GeM activity, e-commerce sales and other digital records alongside bank and payment data.
- Apply normal underwriting controls. The lender still evaluates identity, business continuity, fraud risk, affordability, regulatory requirements and the proposed loan’s terms before making an offer.
What Account Aggregator adds
A UPI history may show customer receipts but not the whole financial picture. Account Aggregator can consolidate consent-based records from participating institutions, allowing a lender to compare payment inflows with GST filings, invoices, government-marketplace sales, e-commerce settlements and bank statements. A broader, cross-checked record can reduce information asymmetry and make automated or faster decisions more practical.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
Consent is central. The borrower decides which information to share and for what purpose under the Account Aggregator framework. Businesses should review the requested data scope, duration and recipient, and keep copies of disclosures or consent confirmations. Access to data should not be confused with a guarantee that a loan will be approved.
Can UPI payments substitute for collateral?
They may help a thin-file business demonstrate repayment capacity, but they do not universally eliminate collateral. A lender can still require security, a guarantee or additional documentation depending on the loan product, amount, risk assessment and applicable rules. Flow-based evidence is most useful when it is stable, attributable to the business and supported by other records.
What an MSME borrower should prepare
- Use a business-linked bank account and merchant payment identity consistently, rather than mixing household and business receipts when possible.
- Keep GST returns, invoices, supplier payments and payroll records aligned with the digital transaction trail.
- Separate refunds, transfers between your own accounts and non-business receipts so they are not mistaken for sales.
- Ask the lender exactly which period of transaction history it needs, how the data will be used and how long it will be retained.
- Check the total borrowing cost, repayment schedule, processing charges, collateral or guarantee conditions and the procedure for disputing a fraud or data error.
Important limits and risks
UPI records can be incomplete when customers pay in cash, sales are made through other channels or several businesses share one account. A high transaction total can also conceal thin margins, heavy refunds or volatile demand. Data quality, account ownership, consent implementation and lender models therefore affect the result.
Rank #4
Privacy and fraud controls matter as much as data availability. Businesses should authorize only legitimate institutions, verify the purpose of each data request and report suspicious access promptly. Lenders remain responsible for complying with their underwriting, privacy, consent and regulatory obligations.
Do these 3 things before closing this tab:
1Fix the driver behind crashes, sound loss and screen glitches2Clear out junk files and repair common Windows errors3Scan for outdated or missing drivers - takes under a minuteWhat Lahiri’s proposal means in practice
The proposal is to make existing digital activity useful evidence for businesses that have been excluded from conventional credit—not to replace underwriting with a UPI score. If lenders combine reliable payment histories with consented GST, marketplace and banking records, they may be able to assess more MSMEs on operating cash flow and make decisions more efficiently. Whether that produces higher approvals, cheaper loans or lower defaults will depend on lender adoption, data quality, safeguards and the individual business’s finances.
Quick Recap
Best Value
- It can be a gift option
- Comes with secure packaging
- Helpful in various ways
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
