CAFRAL publishes first India Finance Report

• The first edition of the India Finance Report was published by the Centre for Advanced Financial Research and Learning (CAFRAL).

• Its theme is “Connecting the Last Mile: Non-Banking Financial Companies (NBFCs) in India”.

MAJOR FINDINGS

• It has taken stock of India’s non-bank financial companies sector — commonly called the shadow banking sector — and pointed out both the ongoing improvements and emerging risks.
• After the liquidity crisis of 2018 and the Covid pandemic, the NBFC sector has improved, along all dimensions — capital position, asset quality, and profitability.
• Monetary Policy Transmission through NBFCs is strong but delayed.
• UPI usage has exponentially increased since its inception in 2016, with its growth outpacing all other modes of digital payments.
  • A 10% increase in per capita UPI transactions usually leads to a 4.6 per cent rise in fintech lending and 1.5 per cent in lending by commercial banks.
  • There were over 8.68 billion transactions per month on the UPI network, with over 300 million unique users and close to 400 participating banks, as of March 2023

ABOUT UPI

• Launched in 2016, UPI allows an instant, real-time payment network and is operated by the National Payments Corporation of India (NPCI).
• The payment system is built as an “interoperable protocol”, which allows third-party vendors to build apps to provide payments as a service.

ABOUT CAFRAL

• CAFRAL is an independent body set up by the Reserve Bank of India in 2011.
• It is a not-for-profit organisation that promotes research in the finance, macroeconomics, and public policy.