Over the past decade, currency holdings climbed from Rs 11.8 lakh crore in March 2013 to Rs 16.6 lakh crore in March 2016, dipped after demonetisation to Rs 13.4 lakh crore in March 2017, then surged to Rs 28.5 lakh crore by March 2021 amid the pandemic. Although the absolute amount of cash continued to rise, the CiC-GDP ratio moderated to 13.7% in March 2022, 12.4% in March 2023, 11.9% in March 2024 and 11.26% in March 2025, before stabilising around 11-11.2% by Jan 2026.
A State Bank of India report linked the record cash stock to tighter tax enforcement, low interest rates and changing household behaviour. Around 18,000 GST notices issued in July 2025 to small vendors based on UPI transaction volumes coincided with spikes in ATM withdrawals in Karnataka, West Bengal and Kerala, indicating a shift back to cash among small traders. Weak deposit growth and lower interest rates have also encouraged precautionary cash savings, while households selling gold and silver to raise liquidity have supported cash holdings and consumption.
Meanwhile, digital payments continue to surge. National Payments Corporation of India data show UPI now accounts for 70–80% of digital transactions. Monthly UPI volumes have jumped from from around 140 crore in March 2020 to over 200 crore by Oct 2020 and 355 crore by Aug 2021, valued at Rs 6.4 lakh crore. Record levels were reached in Dec 2025 with 2,163 crore transactions worth nearly Rs 28 lakh crore, followed by 2,170 crore transactions in Jan 2026 – roughly 70 crore transactions a day.
Denomination patterns indicate cash is increasingly used as a store of value. The Rs 500 note’s share in total currency value rose after the withdrawal of the Rs 2,000 note, while small-value notes below Rs 20 continued to lose share.
Overall, the data point to a structural shift: more cash is being held in absolute terms, but digital platforms are handling a growing share of everyday transactions.
With inputs from TOI