Parliamentary panel asks govt to promote Indian fintech players
The panel also opined that regulation of Indian fintech apps would be more feasible for the regulatory bodies such as RBI and NPCI in comparison to foreign entities which have multiple jurisdictions
The parliamentary standing committee on communications and information technology has asked the government to promote local Indian players in the fintech sector following a submission by the ministry of electronics and information technology (MeitY) which said that Walmart-owned PhonePe and Google Pay account for 83.3% of the UPI market in the county.
Tabled in Lok Sabha on February 8, the panel’s report, ‘Digital Payment and Online Security Measures for Data Protection’, said, “[T]he Committee recommend that there should be focus on promotion of local Indian players in fintech universe. Indigenously developed BHIM UPI is a good example of it, however, its share in the UPI market is very low. The Committee opine that regulation of Indian fintech apps would be more feasible for the regulatory bodies such as RBI (Reserve Bank of India) and NPCI (National Payments Corporation of India) in comparison to foreign entities which have multiple jurisdictions. As India, focusing on ‘Make in India’ in other sectors, the Committee are of the opinion that local entities are to be promoted in fintech sector,” the Prataprao Jadhav-led committee said.
MeitY submitted that Walmart-owned PhonePe accounted for 46.91% of the volume of UPI transactions between October and November 2023 while Google Pay accounted for 36.39%.
The now beleaguered Indian player, PayTM accounted for 12.32%. Homegrown Cred accounted for 0.83% while Amazon Pay, BHIM and WhatsApp Pay accounted for scant 0.44%, 0.22% and 0.20%, respectively.
By volume, UPI transactions accounted for 73.5% of all digital payments in FY23 but in terms of value, they accounted for 6.668%, a proportion that has steadily increased from 0.536% in FY19.
RTGS (real time gross settlement), despite accounting for only 0.213% of the volume of digital payments in FY23, accounted for 69.47% of the total value. RTGS was followed by NEFT which accounted for 4.6% of digital payments by volume but 16.16% of value of transactions. However, unlike UPI, RTGS’s share has been continually decreasing since FY19, both in terms of volume and value. NEFT’s share, on the other hand, has been decreasing in terms of volume but showed a significant rise in FY21 followed by a steady decline in terms of value.
In terms of frauds via UPI, the Ministry of Home Affairs (MHA) submitted that the fraud vs sales ratio had remained almost static at 0.0016% between FY22 and FY24 (until September 2023). This ratio doubled between FY19 (0.0008%) and FY20 (0.0017%).
The absolute number of UPI frauds has been rising in both value and number. It has risen from 108,509 reported frauds worth ₹130.95 crore in the 12 months of FY22 to 70,056 frauds worth ₹142.52 crore in FY24 (until September 2023).