Economy News

Demonetization: cash in circulation almost doubled in 6 years after demonetization – Mintpaisa

Even though digital payments are seeing strong double-digit growth, cash in the system continues to show strong growth.

The growth of currency in circulation in the year to October at Rs 2.7 lakh crore, an increase of 9%, was higher at Rs 2.3 lakh crore, or 8.5%, during the same period the previous year, according to the latest data from the Reserve Bank of India.

Some cash companies processed one of the highest amounts at ATMs in October. In addition, cash continues to be the only payment settlement option for almost 20% of unbanked people who do not have a bank account.

The nationwide lockdown in 2020 as a result of the COVID-19 pandemic ushered in a behavioral shift in the habit of payments and settlements with people moving en masse to digital platforms resulting in a less reliance on cash thanks in large part to the push from government and policy makers to address the restriction of physical movement then.

However, the data indicates that cash continues to be an important method of settling transactions. The Cash Management Company CMS Cash Index for ATMs was up 9% YoY and 13% in the month of September 2022. This index is a weighted index comprised of two factors, the money it injects through ATMs and the money it collects from retail channels and is based on data collected from 659 districts and 12,367 PINs across the country. The total currency processed by CMS through its pan-India network in the month of October 2022 was Rs 1.13 lakh crore, higher than ever for the company in a month, according to a statement from the company.

All major states showed robust growth in cash withdrawals, CMS said. Large urbanized states such as Maharashtra saw 17% growth, Karnataka (13%) and Tamil Nadu (11%) saw healthy double-digit growth in October 22 compared to October 21. Similar trends were also seen in upcoming developing states such as Bihar (14%) and Uttar Pradesh (13%), he said. The month also saw the CMS Cash Index for the ATM channel hit an all-time high indicating the best Diwali ever.

Significantly, it has been six years since the government banned Rs 500 and Rs 1000 banknotes this week, causing the currency in circulation to plummet by almost 50% from Rs 17.97 lakh crore on 04 November 2016 at Rs 8.98 lakh crore on 06 January 2017. . But over the six-year period, the currency in circulation nearly doubled to Rs 32.1 lakh crore.

Surveys also indicate that cash remains the preferred option in many areas. 76% of households surveyed said they used cash for groceries, dining out and food delivery transactions in the past 12 months, according to a survey of more than 32,000 citizens across the country through the community-based social media platform LocalCircles. Also, most people paid cash for domestic staff services, personal services and home repairs, etc. Interestingly, some respondents also had difficulty accepting and activating digital payments.

Real estate transactions emerged as the main area of ​​cash use from a value per transaction perspective. 44% of respondents who bought a property in the past 7 years said cash was part of the transaction, although the percentage of respondents paying cash for property transactions has declined, the survey found.


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