What changed in Indian finance in 2025 — and what didn’t

India’s financial ecosystem in 2025 was shaped less by headline-grabbing launches and more by consolidation across payments, lending, and trade finance.

Digital rails expanded further into daily economic activity, regulatory frameworks stabilised after a period of churn, and lenders increasingly relied on data-driven models to assess risk.

At the same time, persistent constraints around liquidity, documentation, and credit access—particularly for MSMEs and exporters—remained unresolved.

Executives across fintech, lending, and trade platforms describe 2025 as a year in which the system began operating with greater predictability.

The emphasis shifted from rapid adoption to durability: ensuring that digital infrastructure, compliance norms, and financing models can support sustained participation rather than episodic growth.

Payments infrastructure continue to scale

The Unified Payments Interface (UPI) continued to anchor India’s digital payments landscape in 2025.

According to government data, UPI now accounts for roughly 85 percent of all digital retail transactions, with monthly transaction values exceeding ₹24 lakh crore during the year.

The platform’s reach has expanded beyond urban centres, with assisted digital models enabling higher adoption in rural and semi-urban regions.

Policy and industry observers increasingly view UPI less as a payments innovation and more as a base infrastructure.

Its integration with features such as credit lines, recurring mandates, and merchant-linked services has widened its role in everyday financial activity.

Akshay Mehrotra, Managing Director and Group CEO of Fibe, said 2025 reflected a broader shift in how technology and policy are shaping financial services.

“The year saw innovations in UPI with the platform introducing enhanced features for ease of use and transparency, simplified credit access and the landmark GST rationalisation,” he said, adding that consumers are now more informed and expect seamless experiences across payments and credit.

MSMEs and the credit gap

Despite these advances, access to working capital remains a structural issue for MSMEs.

Estimates from M1xchange and Deloitte suggest India’s MSME credit gap remains in the range of ₹20–25 lakh crore, with formal channels meeting only a fraction of total demand.

SIDBI estimates place the gap even higher, at close to ₹30 lakh crore, particularly affecting service-sector enterprises and smaller suppliers.

Sundeep Mohindru, Founder and Promoter of M1xchange, said that while regulatory frameworks and digital tools have improved access to formal credit, the gap persists.

“There still exists a large MSME credit gap, between ₹25 lakh crores and ₹30 lakh crores,” he said.

According to Mohindru, closing this gap requires more reliable access to working capital and better use of verified transaction data to improve credit assessment.

Industry research indicates that lenders are increasingly shifting toward cash-flow-based lending models, supported by digital invoicing, GST data, and trade receivables platforms.

The Reserve Bank of India has endorsed this approach through initiatives such as the Trade Receivables Discounting System (TReDS), which allows MSMEs to discount invoices with banks and institutional investors without increasing balance-sheet leverage.

Trade finance and exporter pressures

Exporters faced additional challenges in 2025 as global trade conditions remained volatile.

Longer payment cycles, currency fluctuations, tariff-related pricing changes, and documentation requirements continued to affect liquidity planning, particularly for small and mid-market firms.

Pushkar Mukewar, Co-founder and CEO of Drip Capital, said exporters are operating in a markedly different environment compared to earlier years.

“Documentation gaps, extended payment cycles, currency fluctuations, and tariff-driven pricing shocks are creating uncertainty, especially for businesses that rely on predictable working capital,” he said.

“This is the single biggest constraint we see: no demand, but liquidity and risk management.”

Mukewar added that exporters are increasingly seeking structured, real-time financing solutions aligned with global supply chains rather than traditional banking processes.

He noted that broader lender participation—including global banks, development institutions, and private capital—has improved efficiency and transparency, but further progress will depend on shared data frameworks and system interoperability.

Last-mile inclusion

While much of the discussion around fintech centres on infrastructure and capital, last-mile delivery remains a determining factor in financial participation.

Assisted digital models and business correspondents continue to play a significant role in extending services to underbanked regions.

Anand Kumar Bajaj, Founder, Managing Director, and CEO of PayNearby, said 2025 was marked by efforts to strengthen trust alongside access.

“When technology and local trust come together, economic participation grows meaningfully,” he said, pointing to UPI adoption and policy measures such as Digital Banking Units and updates to authentication standards.

This trust-based approach has also been evident in women-led financial inclusion initiatives.

Jayatri Dasgupta, CMO of PayNearby and Program Director of Digital Naari, said the past year saw a shift in how women’s economic participation is viewed.

“Female customers transact almost 66 percent higher with women agents,” she said, citing internal network data.

According to Dasgupta, women banking correspondents are contributing both to household incomes and to broader access to formal financial services within their communities.

Data, AI, and interoperability

Across segments, executives and researchers point to data integration as a central requirement for the next phase of financial development. Events such as Global Fintech Fest 2025 highlighted the growing role of AI in underwriting, payments, and compliance, alongside calls for interoperable systems that allow lenders and platforms to share verified data securely.

Global research from consulting firms indicates that payment systems worldwide are moving toward greater interoperability and embedded finance models.

In India, this trend is closely linked to Digital Public Infrastructure such as UPI, Aadhaar, and Account Aggregator frameworks, which enable consent-based data sharing.

Mukewar noted that future progress in trade and MSME financing will depend less on capital availability and more on coordination. “Enabling seamless financing won’t just be about deploying capital,” he said. “It will require shared data frameworks, interoperable systems, and deeper collaboration between regulators, lenders, and technology platforms.”

By most accounts, 2025 marked a transition phase rather than an endpoint. The financial system demonstrated greater stability, but structural constraints—particularly around MSME credit and exporter liquidity—remain.

The coming year is expected to test whether existing digital infrastructure and regulatory clarity can translate into broader, more consistent access to finance.

If interoperability improves and institutional participation deepens, platforms such as TReDS, digital lenders, and trade-finance providers could play a larger role in closing persistent gaps. If not, progress may remain uneven, concentrated in segments already well integrated into formal financial channels.

For now, 2025 stands as a year in which India’s financial infrastructure matured, even as the limits of that infrastructure became clearer.

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