Mumbai: Even as the adoption of digital payments in India has risen sharply over the last decade, cash in circulation has not declined, especially in rural and semi-urban areas, among low-income groups, older populations, and small businesses, Reserve Bank of India (RBI) Deputy Governor Shirish Chandra Murmu has noted.
“Currency in circulation continues to grow at double-digit rates even as cash’s share of individual transactions declines, thanks to growing digital payment adoption. That combination makes future demand harder to predict, which complicates our planning for production and distribution capacity,” the Deputy Governor said in a speech at an event organised by Bank Indonesia in Jakarta on August 13.
“Cash remains a significant mode of payment in the Indian economy, and preserving trust in it, through clean notes, secure logistics, and a currency ecosystem people can rely on, is central to preserving monetary sovereignty itself. That is a goal that all central banks of all countries share, whatever mix of cash and digital payments the economies settle into,” he remarked.
Over the past few years, the Deputy Governor said the RBI has produced between 28 and 30 billion banknotes annually across six denominations and disposed of roughly 21 billion pieces a year. Currently, 176 billion banknotes are in circulation in India.
By comparison, roughly 56 billion US dollar bills and 30 billion euro banknotes were in circulation at the end of last year.
“One caveat, in fairness to the comparison: our count is driven partly by a denomination mix weighted toward lower-value notes, which naturally means more pieces change hands for the same value of transactions. Even so, the volume gives you a sense of the scale of the logistics we manage every day,” Murmu said.
To ensure durability of currency, the RBI is exploring ways to extend the life of banknotes, including surface coatings on the substrate, and polymer notes for lower denominations. The regulator is also working to reduce the carbon footprint of the cash cycle: “optimising our distribution network for efficiency and moving up the value chain in how we dispose of banknote briquettes”, he added.
(IANS)
