Cash Remains Critical in India Despite Digital Payment Boom, Says RBI Deputy Governor

Despite the rapid growth of digital payments across the country, cash continues to play a critical role in India’s economy. The observation was shared by Reserve Bank of India (RBI) Deputy Governor Shirish Chandra Murmu while speaking at the Global Cash Management 2026 conference organized by Bank Indonesia in Jakarta.

Addressing central bankers from across the globe, Murmu highlighted what he described as India’s 'cash paradox.' He noted that currency in circulation continues to grow at double-digit rates, even as the share of cash in individual transactions declines due to the increasing adoption of digital payment systems.

The Deputy Governor emphasized that cash remains particularly vital in rural and semi-urban regions, as well as among low-income households, senior citizens, and small businesses. He pointed out the massive scale of India’s currency management operations, revealing that the country currently has approximately 176 billion banknotes in circulation.

According to the RBI data shared at the conference, the central bank produces between 28 billion and 30 billion banknotes annually, while simultaneously withdrawing about 21 billion soiled notes every year. Murmu stressed that maintaining public confidence in cash is a core responsibility of the central bank, pointing to the RBI’s Clean Note Policy under which old and unfit currency notes are regularly removed and replaced with good-quality banknotes.

Murmu also drew attention to India’s self-reliance in currency production. Banknote paper mills, printing presses, and ink production units are largely controlled by the RBI and the Government of India.

Looking at future operational hurdles, the Deputy Governor identified several key challenges. These include the difficulty of forecasting currency demand in an increasingly digital economy, improving note durability through technologies such as polymer notes, and reducing the environmental footprint of the entire cash management cycle.

Murmu concluded that while digital payments are clearly expanding, cash continues to be a significant payment instrument. Ensuring its integrity through secure logistics and efficient distribution remains a fundamental responsibility for the central bank.

"The coexistence of digital payments and physical cash in India presents a unique operational landscape for businesses and financial institutions. While digital adoption is surging, the continued growth of currency in circulation demonstrates that cash remains indispensable for large segments of the population, particularly in semi-urban and rural markets. For founders and business leaders, this highlights the necessity of maintaining flexible payment models that cater to diverse consumer segments across different tiers of the economy." — Dr. Shishir Gupta, Founder & CEO, StartupLanes