UPI most preferred payment mode for ~38% Indians in rural and semi-urban areas; 96% demonstrate strong inclination to save and invest: EY and CII report

• 55% of respondents seek financial literacy programs
• Semi-urban regions also showed the highest awareness across most financial inclusion schemes, particularly Pradhan Mantri Jan Dhan Yojana

New Delhi/Mumbai, 17 December 2024 – UPI is the most preferred transaction mode for rural and semi-urban India, as per a latest report by EY and the Confederation of Indian Industry (CII). Launched at CII’s Annual Technology Summit in New Delhi, the report titled ‘Financial Inclusion through Technology and Literacy in India: Strategies for Sustainable Growth’ surveyed a sample of 1,033^[1] respondents, to understand the current level of financial literacy, and explore the transformative potential of technology in empowering under-banked populations and fostering economic resilience.

The survey revealed that UPI is the most preferred transaction mode for nearly ~38% in rural and semi-urban India. Respondents aged between 18 and 35 had a higher preference for UPI, whereas 19% respondents preferred cash only, and only 11% did not prefer UPI as a mode of payment.

Interestingly, 96% of respondents demonstrated a strong inclination to save and invest, creating opportunities for financial institutions to offer tailored investment products. 55% expressed interest in learning about financial management, including savings, budgeting, insurance and loans, emphasizing the need for targeted financial literacy programs. Semi-urban regions also showed the highest awareness across most financial inclusion schemes, particularly Pradhan Mantri Jan Dhan Yojana (PMJDY) ranks first at 84% and Atal Pension Yojna (APY) ranks second at 74%, indicating stronger outreach and penetration. However, awareness among women is notably low, with 18% of women unaware of any financial inclusion schemes.

Reflecting on the findings, Saurabh Chandra, Senior Partner & Financial Services (Domestic) Consulting Head, EY India said “As India moves towards becoming a $5 trillion economy, financial inclusion must be at the core of this growth strategy. Our report’s findings suggest a fertile ground for financial institutions to introduce innovative saving and investment solutions, particularly in rural and semi-urban India, where there is inclination to learn about financial management. Technology, coupled with financial literacy, has the potential to empower millions of individuals, but for true inclusion to occur, the ecosystem must prioritize both education and accessibility in its approach.”

Despite increased adoption of smartphones as well as mobile banking and internet banking, 86% of account holders in rural and semi-urban India still prefer visiting branches. This reflects the continuing trust in traditional banking methods, even as digital options grow. Among those who do secure loans, 60% rely on formal banking channels. While 69% of women use digital banking, only 44% transact regularly, highlighting the need for improved digital literacy and access for women.

The report further establishes that higher literacy enables individuals to understand and effectively utilize financial products. Credit behavior was found to be restrictive due to lack of knowledge, documentation, and collateral, highlighting gaps in financial literacy and access to formal credit. The popularity of schemes such as PMJDY is presented as an example of successful ecosystem participation, supported by a robust mobile infrastructure.

Adding to it, Vijay Rai, Chairman – CII Delhi Panel on Emerging Technologies & IT/ ITES said, “Technology and financial literacy are transforming India's financial landscape. The shift towards digital payments is evident, but we must focus on empowering under-banked communities with the tools and knowledge they need to thrive in this evolving ecosystem. This report provides a timely and insightful analysis of the progress made in digital financial inclusion in India, and expert insights for policymakers, practitioners and industry at large, that can be applied in their own operating contexts."

The report outlines short and long term recommendations to achieve higher financial inclusion. The short-term focus needs to be on understanding the unbanked and under-banked segments and enabling them with technology and financial literacy initiatives. The long term approach emphasized that a tech-driven financial ecosystem is key for lasting inclusion. This ecosystem should leverage AI and advanced automation to provide personalized, accessible and secure financial services. By clearly outlining each participant's role in this system and motivating their involvement through gamification and measurable goals, a sustainable financial inclusion model can be built.

About the survey

The purpose of this research is to evaluate the current state of financial inclusion in India, with a focus on the diverse experiences. The firms surveyed a sample of 1,033 respondents across key demographic segments, including women and rural populations. Out of the 1,033 respondents surveyed, approximately 73% were from rural areas, while female respondents constituted 22% of the total sample. The sample was distributed across various states, including Delhi, Tamil Nadu, Karnataka, Haryana, Maharashtra, West Bengal, Uttar Pradesh, Bihar and the Northeast. 

About EY

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About CII

The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, government and civil society, through advisory and consultative processes. CII is a non-government, not-for-profit, industry-led and industry-managed organization, with around 9,000 members from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 365,000 enterprises from 294 national and regional sectoral industry bodies.

For more than 125 years, CII has been engaged in shaping India’s development journey and works proactively on transforming the Indian Industry’s engagement in national development. CII charts change by working closely with government on policy issues, interfacing with thought leaders, and enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized services and strategic global linkages. It also provides a platform for consensus-building and networking on key issues.

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