Recently, SBI Chairman CS Setty called for a unified digital backbone linking credit bureaus, fraud registries, e-KYC utilities, UPI & the account aggregator network. This would not only help curb bank frauds but also provide the scale & inclusion needed for India’s next phase of growth, explains V Shunmugam
l What would a national grid do?
THE NATIONAL FINANCIAL Grid (NFG) is a proposed unified digital backbone designed to connect India’s various financial systems—such as electronic Know Your Customer (e-KYC), Unified Payments Interface (UPI), account aggregators, credit bureaus, fraud registries, and MSME digital identity layers—into a coordinated intelligence network. While India’s digital public infrastructure is world-leading, it operates in separate compartments. Today, data exists in silos—UPI trails, GST filings, bill-payment patterns, digital-wallet flows, credit-bureau files, bank statements, and more.
Banks rely on their own customer histories and fraud alerts; payment firms only see their slice of the flow; credit bureaus gather only a portion of borrowers’ footprints. The proposed national grid would unify these scattered signals into coherent profiles, helping both lenders and regulators make better decisions. The NFG establishes the essential infrastructure that enables these systems to communicate in real time. For an economy aspiring to be the world’s third largest, such integration would provide the scale, security, and inclusion needed for the next phase of growth.
l Changing the inclusion game for Indians
FINANCIAL INCLUSION TODAY cannot rely solely on account openings. Millions of gig workers, micro-entrepreneurs, and informal labourers remain “thin-file” borrowers, not because they lack financial activity but because their activity is scattered across multiple platforms.
The NFG will help unify this activity—UPI inflows and outflows, small business payments, bank statement data, GST records, subscription payments, and even utility data—into a single digital financial identity. When lenders can view these signals in one place, they can offer smarter loan pricing, approve applications faster, and bring more borrowers into the formal financial system.
For consumers, this means access to cheaper credit; for MSMEs, it means building creditworthiness based on actual operations rather than collateral alone.
l What frauds would the NFG tackle?
THE NATURE OF financial fraud across the ecosystem is multi-layered.
n India has seen 8.5 lakh mule bank accounts across 700-plus branches, used as conduits for cyber-fraud networks.
n In 2024, India recorded 36 lakh cyber-fraud cases and losses of `22,845 crore through UPI scams, phishing, OTP theft, and fake apps.
n In the first half of FY25, banks reported 18,461 frauds totalling `21,367 crore, an eight-fold jump over FY24.
n Multi-institutional fraud rings: Money hopping across banks within minutes, exploiting gaps in detection systems.
A siloed system cannot detect such patterns early. The Grid allows for ecosystem-wide alerts-for example, if a new account opened at Bank A suddenly shows mule-like behaviour previously seen at Bank B, or if a device ID associated with fraud appears at another bank. This is fraud prevention on a large scale, not just institution-level firefighting.
l Big Data will power the Grid
BIG DATA WILL be the main engine powering the NFG. Its value comes not just from connecting systems but from analysing the flow of real-time structured and unstructured data-such as transaction histories, device IDs, behavioural signals, cash-flow cycles, geo-patterns, and fraud fingerprints. Analytics can identify early warning signs, group suspicious accounts, detect unusual financial flows across banks, improve credit scoring, and even develop predictive models for MSMEs with seasonal revenue patterns. Big Data also accelerates formalisation; when cash-flow footprints, payment behaviours and identity verification come together, lenders can trust new-to-credit customers rather than avoid them.The proposed NFG will thus become a national “sense-making” engine, allowing lenders and regulators to view the entire financial ecosystem as a connected network rather than isolated black boxes, reducing information asymmetry — the main barrier to inclusion.
l Benefits for citizens, economy
IF YOU WORRY about UPI fraud, the NFG can block suspicious transactions before they reach a fraudster. If you run a small business, it can help lenders recognise your genuine financial strength even without collateral. If you are salaried, it offers a safer payment environment and a more efficient banking system. And as a taxpayer, reducing fraud helps lower systemic losses that banks would otherwise pass through to consumers.
For banks, it cuts fraud risk, improves underwriting, and increases access to reliable data. For the Reserve Bank of India, it will provide real-time visibility of sector-wide risks and fraud hotspots, enabling faster macro-prudential action. For the economy, it improves credit efficiency, strengthens trust, and supports India’s formalisation journey. Most importantly, it provides the digital plumbing required for high-speed, inclusive growth as India moves into the next global economic tier.
The writer is partner, MCQube