Sitharaman says India's finance future is 'phygital', driven by UPI

At the Digital Payments Awards, Sitharaman lauds UPI's global success, urges fintech to tackle cybersecurity and deepfakes, and credits RBI's enabling regulation

Emphasising the convergence of physical and digital financial experiences, Union Finance Minister Nirmala Sitharaman on Wednesday said India’s financial future will be “phygital”—a blend of physical and digital services.

 

“It is important to leverage the reach of technology as well as maintain physical presence to serve customers better and build trust over time,” Sitharaman said at the Digital Payments Awards 2025, held in New Delhi.

 

Her address painted a comprehensive picture of India’s digital public infrastructure, highlighting citizen adoption, fintech innovation, and banking resilience as the three foundational pillars of its success. She also underscored India’s inclusive fintech model as a global template.

 

“Our fintech revolution is not just Made in India, but also Made for the World. We’re exporting solutions, not just software,” she said, referencing UPI-based payments now accepted in seven countries, including France, the UAE, and Singapore.

 

“It is heartening to note that international merchant payments through UPI are now accepted at select merchant outlets in Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka, and the UAE,” she added.

 

Sitharaman noted that UPI processed 1,867.7 crore transactions in May 2025, totalling over ₹25.14 lakh crore—representing 33.1 per cent year-on-year growth in volume and 23 per cent in value. She attributed this adoption to India’s innovation-friendly ecosystem, including the regulatory sandbox model that enables real-time testing for fintech firms. 

 

Calling for greater financial literacy and stronger cybersecurity infrastructure, the Minister stressed the need to protect citizens from modern digital threats such as deepfakes and “Friday-night scams”. She urged deep-tech startups to focus on next-generation challenges, supported by policy and regulatory flexibility.

 

“The role of the regulator must be acknowledged. Without it, this movement would not have been possible,” Sitharaman said, crediting the RBI’s light-touch regulation for fostering innovation without stifling growth.

 

Sitharaman stated that India’s fintech model has earned admiration worldwide, with many advanced economies seeking collaboration. “What we have achieved in six years would have taken 50 years under normal circumstances,” she said.

 

Fintech Industry Meeting Prior to Awards

 

Earlier in the day, Sitharaman held a closed-door meeting with fintech companies to review the ecosystem’s status, according to a person with direct knowledge of the discussion.

 

This was the first such meeting in several months and was attended by Minister of State for Finance Pankaj Chaudhary, Financial Services Secretary M Nagaraju, and officials from the Reserve Bank of India, the source added.

 

Key topics included improving the ease of doing business for fintechs and measures to prevent financial fraud. Fintech representatives also shared their perspectives. However, the contentious issue of merchant discount rates (MDR) on UPI transactions was not discussed, the source clarified.

 

The last such meeting between the finance ministry and fintech stakeholders took place on 26 February 2024, in the wake of regulatory action against Paytm Payments Bank. At the time, Sitharaman had suggested that the RBI and other regulators hold regular virtual meetings with startups and fintechs to address concerns in a structured manner.