Gap between per capita currency in circulation and ATM withdrawals widens sharply, reflecting precautionary cash holding even as digital payments surge to record highs
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On denomination patterns, ₹500 notes accounted for about 86 per cent of the total value of currency
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The gap between per capita currency in circulation and ATM withdrawals has widened sharply, signalling a rise in precautionary cash holding, according to a report by State Bank of India.
The gap increased to ₹9,127 in FY26 from ₹1,804 in FY24. The report attributed the trend to global uncertainties and behaviour seen during earlier disruptions. While cash levels have risen in absolute terms, the cash-to-GDP ratio has declined from 14.4 per cent in FY21 to 12.1 per cent in FY26, indicating that currency growth remains aligned with overall economic expansion.
Currency in circulation increased 11.9 per cent year-on-year to a record high of ₹41.6 trillion in FY26, with an incremental rise of ₹4.4 trillion, the highest since the post-demonetisation period. At the same time, Unified Payments Interface (UPI) transactions also touched record levels, rising 20.6 per cent in value to ₹314 trillion and 30 per cent in volume to 241.6 billion.
Further, the growth in per capita currency holding has broadly tracked income expansion over the past decade, but at a marginally slower pace, indicating the rising role of digital payments. Per capita gross domestic product rose from ₹71,609 in FY12 to ₹2.5 trillion in FY26, registering a compound annual growth rate (CAGR) of 9.4 per cent. Per capita currency in circulation increased from ₹8,762 to ₹29,324, at a slightly lower CAGR of 9.0 per cent, the report said. The 40-basis-point gap between the two growth rates is nearly equivalent to per capita UPI transactions, estimated at ₹1,301 in FY26, the report said, while cautioning that UPI figures reflect high-frequency usage rather than stock of money.
The report said that the sharp rise in currency in circulation alongside record digital transactions reflects increased precautionary demand for cash rather than a contradiction in payment trends. Both cash and digital payments are “indispensable” and complement each other, with only marginal substitutability. While UPI is predominantly used for small-value transactions, about 86 per cent of person-to-merchant and 60 per cent of person-to-person transactions are below ₹500, cash continues to be held for emergencies and informal usage.
On denomination patterns, ₹500 notes accounted for about 86 per cent of the total value of currency. Following regulatory measures to improve the availability of lower denominations, the share of ₹100 notes increased to 8.2 per cent in March 2026 from 6.2 per cent a year ago.
The report also noted that central bank digital currency (CBDC) remains at a nascent stage, with circulation at ₹1,016 crore, or about 0.02 per cent of total currency in circulation.
Decoding numbers
- According to SBI report, the gap increased to ₹9,127 in FY26 from ₹1,804 in FY24
- Cash-to-GDP ratio declined from 14.4% in FY21 to 12.1% in FY26
- Currency in circulation increased 11.9% to a record high of ₹41.6 trillion in FY26
- UPI transactions also touched record levels to ₹314 trillion in value
- Per capita currency in circulation increased from ₹8,762 to ₹29,324
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