UPI has replaced much of the currency in circulation: SBI report

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According to a recent report by the State Bank of India (SBI), UPI has largely replaced physical currency in circulation. Contrary to popular belief, semi-urban areas contribute to about one-third of the total value of UPI transactions.

The report mentioned that 90 percent of the transaction value comes from the top 15 states, including Andhra Pradesh, Maharashtra, Telangana, Karnataka, Uttar Pradesh, Rajasthan, Tamil Nadu, Bihar, West Bengal, Odisha, Kerala, Madhya Pradesh, Gujarat, Assam, and Haryana. The average transaction amount in these states ranges from Rs 1,600 to Rs 2,000. Furthermore, around 67 percent of UPI transactions for merchants and 87 percent for individuals involve amounts exceeding Rs 2,000.

The top 100 districts account for approximately 45 percent of the UPI transaction value. This indicates that UPI has significantly replaced physical currency, as stated in the SBI report. Among different areas, metros account for 20 percent of the total volume and value, while urban, rural, and semi-urban areas contribute 20 percent, 25 percent, and 35 percent respectively.

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As per the Economic Survey 2023, UPI accounted for 52 percent of the total 8,840 crore digital financial transactions in FY22. The survey revealed that UPI transactions in terms of value and volume grew by 121 percent and 114 percent respectively. In December 2022, UPI reached its highest-ever record with 782 crore transactions worth Rs 12.8 lakh crore.

India plans to expand the UPI service to countries like Bahrain, Saudi Arabia, and others. Talks are underway with various countries, although they are still in the early stages. Bhutan became the first country to adopt UPI in 2021, followed by Nepal in 2022. Additionally, India and Singapore have connected their national payment systems this year.

Furthermore, the Japanese Digital Minister, Kono Taro, mentioned last month that Japan and India are working on enhancing digital cooperation. They are considering joining the Indian UPI payment system and exploring the possibilities of mutual recognition of electronic identification (e-ID) to increase interoperability.

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