RBI says cash demand is becoming harder to forecast as digital payments expand
Key Takeaways
- •Currency in circulation in India continues to grow at double-digit rates, complicating RBI forecasts for banknote demand.
- •Deputy Governor SC Murmu said cash is still widely used across the country, especially in rural areas, among low-income groups and small businesses.
- •The RBI said its banknote planning has become more difficult because India’s payments system is changing quickly.
- •Digital transactions are expanding, but physical cash remains an important part of everyday commerce for many users.
The Reserve Bank of India is finding it increasingly difficult to forecast demand for banknotes as currency in circulation continues to rise at double-digit rates even as digital payments gain ground.
Deputy Governor SC Murmu said cash remains widely used across the country, especially in rural areas, among low-income groups and small businesses.
The central bank’s challenge comes as India’s payments landscape continues to evolve, with digital transactions expanding while cash remains an important part of everyday commerce for many users. For the RBI, that makes banknote planning a moving target: it has to account for a payment system that is changing quickly, while physical currency still serves a broad base of users and transactions. Currency in circulation has stayed on a strong growth path, making it harder for the RBI to estimate future banknote demand with precision.
Murmu’s remarks underline the continued relevance of physical cash in India despite the rapid adoption of digital payment systems.
