Digital payments are rapidly increasing in the country, but cash usage is not far behind. The latest SBI Research report tells a different story. Let's find out more...

SBI Research Report Currency Circulation: Digital payments are rapidly increasing in the country, but cash usage is not far behind. According to the latest SBI Research report, Currency in Circulation (CiC), i.e., the total value of notes in circulation, has reached a record high of approximately ₹40 lakh crore.

Notably, this increase comes at a time when digital payments are becoming increasingly popular. People are adopting online payments for transactions. SBI Research has presented its latest report, detailing the main reasons behind this increase in cash usage. Let's learn more about this...

1. Increase in cash usage after the GST notice

An SBI Research report has revealed that businesses have shifted from digital payments to cash. This is due to factors such as GST notices. According to the report, in July 2025, approximately 18,000 small businesses in Karnataka were sent GST notices based on UPI transactions.

Following this, many businesses shifted from digital payments to cash transactions. Data showed that cash withdrawals increased in that district after the GST notice. This figure increased by an average of ₹37 crore per month. This means that the decrease in digital payment acceptance increased cash flow.

2. Reduction in interest rates and the impact of rural consumption

The increasing demand for cash is not only driven by digital transactions, but also by other economic factors. The SBI Research report explains the reasons for the continued need for cash through the money demand model.

According to the report, the increasing use of UPI should normally reduce the demand for cash, but falling interest rates and increasing consumption in rural areas have offset this trend. This means that despite the rise in digital payments, the need for cash transactions has not completely disappeared.

3. Increased circulation of smaller notes

According to the report, the share of 100, 200, and 500 rupee notes in circulation is increasing in the country. By March 2025, the share of 500 rupee notes will reach 86 percent. The RBI has also directed banks to make more 100 and 200 rupee notes available in ATMs.