Both cash and digital are indispensable for India and complement each other but there is a marginal substitutability, as a household may use UPI for many retail small payments
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NEW DELHI — Both cash and digital are indispensable for India and complement each other but there is a marginal substitutability, as a household may use UPI for many retail small payments but still keep cash at home for emergencies or informal transactions, a new SBI Research report said on Friday.
Notably, India has launched Central Bank Digital Currency (CBDC) but the e-Rupee circulation is at a very small amount of Rs 1,016 crore till March 2025, and there is a need for further efforts in awareness, usability, and strategic partnerships with fintech applications are essential to boost their usage, said the report.
The movements in per capita CiC (currency in circulation) with the per capita GDP reveals some interesting trends.
The per-capita GDP (at current prices) has increased from merely Rs 71,609 in FY12 to Rs 2,51,393 in FY26, a CAGR of 9.4 per cent.
During the same period, the per capita CiC has increased from Rs 8,762 to Rs 29,324, a CAGR of 9.0 per cent.
“The per-capita CAGR of CiC is still lower than the GDP. Interestingly, we found that this gap (0.4 per cent) in CAGR between CiC and GDP is nearly equivalent to UPI. The per capita transaction UPI is Rs 1,301 in FY26,” the findings showed.
However, a per capita UPI transaction needs to be interpreted carefully, as an individual can make many UPI transactions say over a point of time as opposed to cash just because of sheer convenience, it explained.
While ATM cash withdrawals are using primarily for transactions purposes, the CiC included all the cash that is used for transaction as well as precautionary motive.
“Our research indicate that this gap between per capita CiC and ATM withdrawal has increased from merely Rs 1,804 in FY24 to Rs 9,127 in FY26 (a whopping 5-times increase). We believe this gap is primarily because of precautionary motive of using cash by individuals,” the report showed.
One possibility of using money for precautionary motive could be heightened uncertainty as is being currently witnessed because of the ongoing war. This had happened during Russia-Ukraine war too.
In value terms, denomination-wise share is very skewed in India. Rs 500 denomination accounted for 86 per cent of share as of March 2025 (significantly increased from 77 per cent as of March 2023).
This uneven distribution has prompted RBI to direct all banks and white label ATM operators (WLAOs) to ensure that their ATMs dispense Rs 100 and Rs 200 denomination banknotes on a regular basis.
“Our results indicate that the share of Rs 500 note (in value terms) is constant around 86 per cent, while the share of Rs 100 note has increased from 6.2 per cent as of March 2025 to 8.2 per cent in March 2026,” said the report.