Authors: Chinmayi G K, Sainath Shet,, Shivarudra Kurubar, Dr. Abhijit Chakraborty
Abstract: This study examines the interplay of financial literacy and digital financial services, especially UPI-based digital payments and digital lending platforms, on financial inclusion in India. Drawing on an exclusively secondary research methodology, this paper synthesizes insights from related peer-reviewed journal articles, government reports, surveys by RBI and NPCI, and research papers from credible academic sources. The literature demonstrates that digital financial tools have reduced several barriers to banking access by providing low-cost, user- friendly, and real-time transactions. UPI has emerged as a game-changing platform that has enabled seamless payments, enhanced transparency, and empowered first-time users, especially in rural and semi-urban areas. The findings also reveal that while digital platforms expand access, financial literacy gaps limit effective use. Most users, especially those from vulnerable groups, still rely on informal guidance and are uninformed on security practices. The secondary evidence also reveals an uptick in a number of concerns in the area of digital lending, including high interest rates, lack of transparency, aggressive recovery practices, and risk of over-indebtedness among low- income borrowers. By presenting case-based evidence from the articles reviewed, this study concludes that only responsible lending frameworks, user education, strong regulatory oversight of digital finance operators, and secure technological infrastructure can accelerate financial inclusion. Generally, the research shows that efforts toward bridging the digital divide will require sustained activities not only in technological innovation but also in digital education, consumer protection, and policy reform to realize equitable and safe financial participation for all.
