India's financial technologies, such as the UPI or Unified Payments System, which have made the country a global front runner, are first put to test not in complex money markets but in the relatively modest farm sector and small cash-starved firms, according to the RBI (Reserve Bank of India).

The first clients often aren't CEOs but farmers. This bottom-up strategy has meant that agriculture has been a springboard for financial technologies. It has not only quickened adoption – two-thirds of Indians are rural residents – but also ensured that frictionless finance is devised keeping the large informal sector in mind, the central bank says.

The leapfrogging success of the scan-and-pay or buy platforms — also known as digital public infrastructure or DPI because the government lays out the core technology – is now being sought to be replicated in lending. India's UPI platform is currently available in seven countries.

The Reserve Bank Innovation Hub (RBIH), a wholly owned subsidiary of the central bank, is getting ready to roll out a UPI-like lending platform, called the Unified Lending System (ULI). It was piloted largely in agriculture and dairy sectors in 12 states involving 16 banks and carried out in collaboration with Amul, the country biggest cooperative-based milk brand.

As in the case of UPI, lenders using the ULI will be able to offer credit on a plug-and-play-basis, which will expand availability of formal credit. "Our digital payments ecosystem has been developed as a free public good," PM Narendra Modi had told a finance ministers' conference in 2023.

The RBI is now also piloting a customisable Central Bank Digital Currency (CBDC), or e-rupee, which can be programmed such that even landless farmers, who can't get farm loans because they don't possess land records, can access formal credit.

The CBDC is an electronic form of the rupee and distinct from crypto currency. While both use blockchain technologies, CBDCs are sovereign-backed and regulated, with the same value as a physical fiat currency. Cryptos are privately created stores of value, outside regulatory oversight and even pose security and economic risks, according to analysts.