The government has cut down the subsidy meant for compensating fintech startups and banks that facilitate UPI transactions in its Union Budget 2023-24 announcements.
The government has reduced the incentive allocation for fintechs and banks by nearly 30%, from INR 2,137 Cr in the previous budget to INR 1,500 Cr. In fact, the government only set aside INR 200 Cr as a subsidy to compensate UPI players in the 2021-22 budget. However, industry stakeholders, including the Reserve Bank of India (RBI), have warned that the move could harm UPI growth. As a result, the government increased the incentive scheme’s budget by more than tenfold in 2022-23.