New Delhi: Foreign investors are increasingly turning to India’s financial sector as the nation transforms millions of previously unbanked citizens into a data-driven, digitally active market, a recent Sunday Independent report revealed. The publication urged African nations to adopt a similar approach to unlock their own economic potential.
Despite external trade challenges and high account dormancy rates, the surge in foreign direct investment (FDI) reflects strong confidence in India’s digital transformation, which leverages its vast population through innovative fintech policies and ecosystem development.
According to the report, India has achieved nearly 89% adult account penetration, though about 25% of these accounts remain dormant. Yet, this has not deterred global financial giants such as Citigroup, Barclays, and Japan’s MUFG, which are expanding in India by deploying data-driven credit scoring models and micro-financial products.
The key catalyst behind this growth is India’s transition from an informal, cash-heavy economy to a digital one. Government-led digitisation initiatives have fostered a fintech ecosystem that creates value from previously underserved and “invisible” segments of the population.
Each digital transaction now generates data that helps lenders assess creditworthiness, enabling access to microloans, insurance, and savings products for new consumers. Investors are drawn to this scalable opportunity in a market of 1.4 billion people, the report said.
To tackle account inactivity, India is introducing targeted innovations and policies. Fintech platforms such as Paytm and PhonePe are leveraging the Unified Payments Interface (UPI) and alternative data—like mobile usage patterns—to design customised products for low-income users.
The South African-based Sunday Independent highlighted India’s model as a valuable blueprint for Africa, urging nations to invest in digital infrastructure, foster innovation to reduce account dormancy, and turn demographic size into economic strength.
India’s example, the report concluded, shows that inclusive digitisation lowers transaction costs, boosts financial activity, and attracts global capital—evident from the country’s over $50 billion FDI inflows in 2024–25.
