The Banking industry in India has historically been one of the most stable systems globally, despite global upheavals. The government has consistently strived to promote financial inclusion through various initiatives targeted to bring the country’s underbanked population under the banking gamut.
India’s financial system has become more resilient and diverse, supported by rapid economic growth and robust policy frameworks, according to the International Monetary Fund (IMF) Financial Sector Assessment Program (FSAP) report.
Indian Fintech industry currently is valued at Rs. 9,61,593 crore (US$ 111 billion) and estimated to be at Rs. 36,47,123 crore (US$ 421 billion) by 2029. India has the 3rd largest FinTech ecosystem globally. There are currently more than 2,000 DPIIT-recognized Financial Technology (FinTech) businesses in India, and this number is rapidly increasing.
The Indian banking system consists of 13 public sector banks, 21 private sector banks, 44 foreign banks, 12 Small finance banks.
The United Payments Interface (UPI) has emerged as the dominant platform in India's digital payments ecosystem, capturing 83% of the total payment volume by the end of 2024, compared to 34% in 2019, as per the Reserve Bank of India’s (RBI) Payments System Report.
UPI’s transaction volume rose from 375 crore in 2018 to 17,221 crore by 2024, with the total digital payments volume reaching 20,787 crore transactions.
The value of UPI transactions also surged from Rs. 5.86 lakh crore (US$ 67.71 billion) in 2018 to Rs. 246.83 lakh crore (US$ 2,852 billion) in 2024, marking an extraordinary compounded annual growth rate (CAGR) of 89.3% in volume and 86.5% in value over five years.
India’s UPI transactions volumes grew 42% year-on-year, during the second half of FY24, reaching a total of 93.23 billion transactions, according to ‘India Digital Payments study released by Worldline.
As of June 2024, the total number of micro-ATMs in India reached 15,17,580. Moreover, there are 1,26,772 on-site ATMs and Cash Recycling Machines (CRMs) and 90,142 off-site ATMs and CRMs. 100% of new bank account openings in rural India are being done digitally.
According to a CMS Info Systems report, India's Currency in Circulation rose 157% from 2014-24, with ATMs up 32% and bank branches expanding 36%, indicating growing cash dependency.
Over 100 Digital Banking Units operate in rural and semi-urban areas, providing digital banking services similar to Automated Teller Machines (ATMs).
Immediate Payment Services (IMPS) transactions rose by 9% to 467 million, with a value increase of 11% to approximately Rs. 6,29,000 crore (US$ 74.7 billion), and FASTag transactions grew by 8% in both volume (345 million) and value, reaching around Rs. 6,115 crore (US$ 733 million). The Aadhaar Enabled Payment System (AePS) recorded 126 million transactions, up 26% in volume and 35% in value, totaling approximately Rs. 32,493 crore (US$ 3.88 billion), reflecting strong growth across various digital payment methods.
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) reduced the policy repo rate from 6.5% to 6.25%. The standing deposit facility rate was also reduced from 6.25% to 6%, and the marginal standing facility rate and the bank rate were lowered from 6.75% to 6.5%. These measures aim to support economic growth while maintaining inflation within the target range.
The Indian digital consumer lending market is projected to surpass Rs. 62,37,360 crore (US$ 720 billion) by 2030, representing nearly 55% of the total Rs. 1,12,61,900 crore (US$ 1.3 trillion) digital lending market opportunity in the country.
In 2024, total assets in the public and private banking sectors were Rs. 16,128,080 crore (US$ 1,861.72 billion) and Rs. 1,09,52,458 crore (US$ 1,264.28 billion), respectively. Assets of public sector banks accounted for 59.53% of the total banking assets (including public, private sector and foreign banks).
The interest income of public banks reached Rs. 11,09,730 crore (US$ 128.1 billion) in 2024. In 2024, interest income in the private banking sector reached Rs. 8,29,049 crore (US$ 95.7 billion).
Digital payments have significantly increased in recent years, because of coordinated efforts of the Government and RBI with all the stakeholders, UPI volume for FY25 (until June) recorded to 2,762. India accounts for nearly 46% of the world’s digital transactions (as per 2022 data). As on July 2024, there were 602 banks actively using UPI.
India's mobile wallet industry is witnessing exponential growth, with a projected CAGR of 23.9% between 2023 and 2027.
The flow of money into non-resident Indian (NRI) deposit schemes surged by 42.8% to Rs. 1,15,477 crore (US$ 13.33 billion) between April and December 2024, compared to Rs. 80,825 crore (US$ 9.33 billion) during the same period in 2023, according to data from the Reserve Bank of India (RBI).
On November 6, 2024, RBI Deputy Governor Mr. T. Rabi Sankar launched the Unified Lending Interface (ULI) at the Business Standard BFSI Summit in Mumbai. The ULI aims to democratize access to credit for the private sector, similar to how the Unified Payments Interface (UPI) transformed digital payments.
According to the BCG Banking Sector Roundup Report of 9M FY23, credit growth was expected to hit 18.1% in FY23. BCG predicts that the proportion of digital payments will grow to 65% by 2026.
According to RBI’s Scheduled Banks’ Statement, deposits of all scheduled banks collectively surged by a whopping Rs. 2,33,56,673.93 crore (US$ 2,752.38 billion) as on April 18, 2025.
As of April 18, 2025, bank credit stood at Rs. 1,86,56,448 crore (US$ 2,198.50 billion).
According to data released by the National Payments Corporation of India (NPCI), UPI transactions volume reached 13,115 crore in FY2024.
Indian tourists in the UAE will soon be able to use UPI payments at more merchant locations, starting with Dubai Duty-Free. This initiative will enhance cross-border transactions, benefiting over 12 million Indian visitors annually.
The Defence Accounts Department (DAD) has entered into Memoranda of Understanding (MoUs) with four banks in New Delhi. This partnership will establish SPARSH [System for Pension Administration (Raksha) Service Centres at 1,128 branches of these four banks nationwide. It aims to enhance last-mile connectivity for pensioners, particularly in remote regions.
Google India Digital Services (P) Limited and NPCI International Payments Ltd (NIPL), have signed a Memorandum of Understanding (MoU) on 17th January 2024 to expand the transformative impact of UPI to countries beyond India.
The Warehousing Development Regulatory Authority and Punjab & Sind Bank signed Memorandum of Understanding to facilitate low interest rate loans to farmers on February 5, 2024.
Fincare Small Finance Bank Limited (Fincare) and AU Small Finance Bank Limited (AU) has merged, with AU being the surviving entity (merged entity).
On 1 July 2023, the merger of HDFC Limited into HDFC Bank was executed with 42 HDFC Bank equity shares of Rs. 1 (US$ 0.012) face value for every 25 HDFC Limited shares of Rs. 2 (US$ 0.023) each fully paid-up.
In March 2024, Kotak Mahindra Bank acquired Sonata Finance Pvt. Ltd. for Rs. 537 crore (US$ 62.5 million), marking a significant strategic move to bolster its presence in the microfinance sector.
Shriram Housing Finance Limited (SHFL), a provider of affordable housing finance services, was acquired by Warburg Pincus for Rs. 4,757 crore (US$ 554 million) on May 13, 2024. It was a key acquisition with 100 percent stake acquired.
The BFSI sector in India saw 64 M&A and private equity (PE) deals in Q3 CY24, with a total value of Rs. 27,472 crore (US$ 3.2 billion). High-value deals exceeding Rs. 2,576 crore (US$ 300 million) accounted for nearly Rs. 12,878 crore (US$ 1.5 billion), as per data by Grant Thornton.
In September 2024, IDFC FIRST Bank completed its reverse merger with parent IDFC Limited, offering 155 equity shares for every 100 shares held in IDFC Limited.
In 2024, Kohlberg Kravis Roberts & Co. (KKR) acquired a controlling stake in HDFC Credila, India’s largest education loan NBFC, in a deal worth Rs. 9,444 crore (US$ 1.1 billion).
In 2024, Indian corporates raised Rs. 58,120 crore (US$ 6.77 billion) through over 230 private credit deals, with NBFCs being active participants. The total for private credit deals, including those by NBFCs, is expected to reach up to Rs. 85,850 crore (US$ 10 billion) in 2025.
In 2024, the International Finance Corporation (IFC) made a Rs. 3,434 crore (US$ 400 million) investment in Bajaj Finance.
The Government of India has been supportive of the banking sector in the country, especially on the financial inclusion agenda. A flagship program, the Pradhan Mantri Jan Dhan Yojana (PMJDY), was launched in August 2014 which aims to provide universal banking services to the unbanked by setting up bank accounts for them and issuing payment cards to all. As of 2023-24, the number of bank accounts—opened under the government’s flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY) reached over 51.11 crore beneficiaries and deposits in the Jan Dhan bank accounts totaled over Rs. 2,17,701 crore (US$ 25.13 billion) till December 15, 2023.
India strengthens banking sector with ‘Baanknet,’ a unified e-auction platform enhancing PSB recoveries, transparency, and credit availability.
In March 2023, India Post Payments Bank (IPPB), in collaboration with Airtel, announced the launch of WhatsApp Banking Services for IPPB customers in Delhi.
Rising income is expected to enhance the need for banking services in rural areas, and therefore, drive the growth of the sector.
The digital payments revolution will trigger massive changes in the way credit is disbursed in India. Debit cards have radically replaced credit cards as the preferred payment mode in India after demonetisation. In December 2022, Unified Payments Interface (UPI) crossed 7.82 billion transactions worth Rs. 12,82,000 crore (US$ 146.48 billion).
The RBI has launched a pilot to digitalize KCC lending in a bid for efficiency, higher cost savings, and reduction of TAT. This is expected to transform the flow of credit in the rural economy.
Digital modes of payments have grown by leaps and bounds over the last few years. As a result, conventional paper-based instruments such as cheques and demand drafts now constitute a negligible share in both volume and value of payments. In November 2022, RBI launched a pilot project on central bank digital currency (CBDC). The platform is called NDS-OM CBDC. The Central bank stated that the use case for the wholesale digital rupee is for the “settlement of secondary market transactions in government securities “as it would reduce transaction costs.
Digitalization of Agri-finance was conceptualized jointly by the Reserve Bank and the Reserve Bank Innovation Hub (RBIH). This will enable delivery of Kisan Credit Card (KCC) loans in a fully digital and hassle-free manner.
