Indian Households to Make 62% Non-Cash Transactions by FY28: Report

Share of non-cash transactions for Indian households are expected to increase to 62 per cent in the financial year 2027-28 from 38 per cent in FY23, according to a report by Bajaj Finserv AMC. Digitalization of the Indian financial sector percolating into smaller cities is indicated in the trend and outlook of digital lending disbursements.

The data highlighted that the share of Tier 3 and smaller cities in non-cash transactions is expected to increase from 40 per cent in FY23 to 44-46 per cent by FY28, while the share of Tier 2 cities is likely to remain almost flat from 35 per cent in FY23 to 34-36 per cent in FY28. Consequently, the share of Tier 1 cities is expected to shrink from 25 per cent in FY23 to around 20 per cent in FY28.

Moreover, Tier 2 and smaller cities are likely to account for over 80 per cent of the estimated $60 billion digital lending disbursements by FY28.

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The report also noted that India’s growing working-age population and rising incomes are expanding the market for credit, insurance, and investments as 75 per cent of households are expected to move into middle and high-income segments by 2030, driving the BFSI demand across urban and rural India.

Overall, while megatrends in the country around digitalisation and UPI, booming tech industry, development in rail infrastructure, etc., are expected to drive India’s growth, India’s financial assets need to become 20x for the country’s gross domestic product (GDP) to grow to $30 trillion. 

Further, India's banking industry will need to add $4 trillion in capital in the next two decades, which in turn will create the multiplier effect for the economy to reach $30 trillion GDP by 2047.

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The optimistic targets come on the back of growth recorded by the BFSI sector in the past 20 years. According to the report, the sector has surged over 50x in market cap in the past two decades to Rs 91 trillion in 2025 from Rs 1.8 trillion in 2005, thanks to the transformation driven by financialization, regulatory reforms and demographic dividends.

However, the BFSI sector in India still has a long way to go, performing across key parameters. As of 2024, total credit to households stood at 39 per cent of the GDP in comparison to China’s 64 per cent. Likewise, life insurance premiums were 3 per cent and mutual fund assets were 20 per cent of the GDP.