Now Reading: India’s journey from hundis to UPI spans centuries of banking
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India’s journey from hundis to UPI spans centuries of banking
India’s UPI payments have a centuries-old predecessor in the hundi, a credit instrument used to move value across distances without physically transporting coins. The Reserve Bank of India says hundis served as…
The Story in Brief
India’s UPI payments have a centuries-old predecessor in the hundi, a credit instrument used to move value across distances without physically transporting coins. The Reserve Bank of India says hundis served as remittance tools, credit instruments and bills of exchange, supported by merchant and banker networks built on trust and reputation.
India’s formal banking system grew alongside these indigenous networks. The Bank of Bengal was established in 1806, followed by the Bank of Bombay and Bank of Madras. The RBI began operations in 1935 and was nationalised in 1949. After Independence, bank nationalisation and branch expansion widened access, with branches rising from 8,262 in 1969 to 59,752 by March 1990.
The Indian Opinion
The easy story is that UPI suddenly solved India’s payments problem, or that digital technology alone transformed access. Both claims miss the long institutional build-up. Hundis relied on trust, while modern banking added regulation, branches and wider reach. UPI changed speed and convenience, but it rests on that earlier infrastructure. The useful test is not nostalgia or hype, but whether digital payments keep extending reliable access beyond India’s existing banked population.
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
