Indian banks need to have digital footprints to expand their business prospects as the system's potential rests a lot on the Unified Payment Interface, Finance Minister Nirmala Sitharaman said on Thursday.
“We need to have digital footprints, which are being generated and completely tapped, so that banking business prospects are expanded on the back of UPI's digital footprints that are now available,” Sitharaman said at the 90th Foundation Day of Bank of Maharashtra in Pune.
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“The potential for the Indian banking system rests a lot on this particular feature of UPI but this feature actually gives us the advantage that you (banks) can plan for your future,” she said.
Sitharaman said that 45% of all real-time digital payments across the world happen in India and banks should look at prospects of widening and expanding that, given the immense growth of UPI.
Banks must capitalise on this opportunity and make digital payments deeper given that seven other countries have also entered the UPI space.
Apart from India, countries including Bhutan, Nepal, Sri Lanka, Singapore, France, Mauritius, and the UAE are using UPI, she said.
UPI's average daily volume in September was 50.74 crore, according to the data on the National Payments Corp. As of August, 608 banks are live on the UPI platform.
A lot of work must be done by banks, given technology is changing the Indian banking landscape, she said.
Banks must ensure that firewalls are robust, reliable and adequate, she said, adding that they “need to have robust and resilient systems." Every now and then, you need to ensure that firewalls are adequate."
Further, she also said that banks must periodically learn to mitigate risks and that data analytics can help with customisation of products, targeting particular groups and identifying stress in business.
Overall, she said that the banking sector's health is indicating what the Reserve Bank of India's financial stability report in June 2024 hinted—that the financial sector remains robust.
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