Digital Payments, Fintech, And the Changing Landscape of Monetary Policy Transmission in India

Dr. Mohammed Shahid
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Dr. Mohammed Shahid: Associate professor in Economics, Government College Osian, Jodhpur, Rajasthan

International Journal of Latest Technology in Engineering, Management & Applied Science, 2025, vol. 14, issue 6, 720-723

Abstract: The surge in digital payments and fintech innovations has reshaped India’s financial ecosystem, influencing how monetary policy is transmitted across the economy. This article examines the role of digital payment systems, particularly the Unified Payments Interface (UPI), and fintech advancements in altering monetary policy mechanisms. By analyzing UPI’s dominance, fintech-driven financial inclusion, and their impact on liquidity, interest rates, and credit channels, the study highlights both opportunities and challenges. A literature review of scholarly works contextualizes these dynamics, emphasizing fintech’s transformative potential and regulatory hurdles. The discussion includes data tables and graphs, sourced from the Reserve Bank of India (RBI) and industry reports, illustrating trends in digital payment adoption and macroeconomic effects. Findings indicate that fintech enhances policy transmission efficiency but introduces risks like cybersecurity threats and regulatory gaps. The article concludes with recommendations for adaptive regulations, enhanced cybersecurity, and financial literacy initiatives to align fintech growth with monetary policy goals. This study underscores the need for a balanced approach to leverage fintech’s benefits while ensuring economic stability in India’s rapidly evolving financial landscape.

Date: 2025
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