ROLE OF AI AND UPI IN PROMOTING DIGITAL FINANCIAL INCLUSION IN INDIA: A DESCRIPTIVE STUDY

Abstract

The rapid growth of financial technology has changed the way financial services are delivered and accessed in India. Artificial intelligence (AI) and the Unified Payments Interface (UPI) have become important components of this transformation: AI is increasingly applied in fraud detection, risk assessment, financial analysis, customer support and personalised services, while UPI provides an interoperable platform for instant digital payments. This study examines the role of AI and UPI in promoting digital financial inclusion in India, focusing on the growth of UPI-based payments, the applications of AI in digital financial services and their contribution to improving access to financial services. It adopts a descriptive research design based on secondary data from the National Payments Corporation of India, the Reserve Bank of India, the World Bank and research publications. UPI transaction volume rose by about 9.7% between April and August 2026 and the number of banks live on UPI increased from 713 to 752, while the RBI Financial Inclusion Index reached 64.2 in March 2024 and account ownership stood at 90% for both men and women in 2024. The study also considers the major challenges, including cybersecurity threats, digital fraud, data privacy concerns, limited digital literacy and regulatory requirements. It concludes that the responsible integration of AI and UPI, together with effective security measures, data protection, digital awareness and suitable regulatory support, can contribute to a more accessible and inclusive digital financial ecosystem in India.