Budget 2023-24: Government Reduces Subsidies for Fintechs and Banks on UPI Transactions

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.