Both cash and digital payments play crucial roles in India, with a new SBI Research report emphasizing their complementary nature. While households use UPI for small retail transactions, they still prefer to keep cash for emergencies and informal deals. India’s introduction of Central Bank Digital Currency (CBDC) has seen limited e-Rupee circulation, necessitating increased awareness, usability, and partnerships with fintech apps for wider adoption.
The report delves into the relationship between per capita CiC (currency in circulation) and per capita GDP, revealing intriguing patterns. India’s per capita GDP has surged from Rs 71,609 in FY12 to Rs 2,51,393 in FY26, growing at a rate of 9.4% annually. Concurrently, per capita CiC has risen from Rs 8,762 to Rs 29,324, with a 9.0% compound annual growth rate.
Interestingly, the report notes a marginal difference in the growth rates of CiC and GDP, which aligns closely with UPI transactions. The per capita UPI transaction amounting to Rs 1,301 in FY26 underscores the evolving payment landscape in India.
While ATM withdrawals primarily serve transactional purposes, CiC encompasses cash used for both transactions and precautionary savings. The report highlights a significant increase in the gap between per capita CiC and ATM withdrawals, indicating a growing preference for cash reserves due to prevailing uncertainties, akin to trends observed during global conflicts.
In terms of denomination distribution, the dominance of Rs 500 notes in India’s currency share stands out, comprising 86% as of March 2025. This disparity has prompted regulatory directives to ensure regular dispensation of Rs 100 and Rs 200 notes by banks and white label ATM operators.
