The ERD economists believe that India’s CiC has continued to rise, reaching new all-time highs of ₹40 lakh crore in late 2025 and early 2026, with a year-on-year (year-on-year) growth of 11.1 per cent (versus 5.3 per cent last year).
On a step-by-step (year-to-date/YTD) basis, CiC has increased by ₹2.76 lakh crore (₹88,517 crore), or 3.11 times more, over the same period.
Similarly, the currency with public (CWP), which stands at ~97.6 percent of the CiC, also touched an all-time high of ₹39 lakh crore for the month ended January 2026 (11.5 percent versus 5.4 percent).
Going by current trends, CWP will surpass the incremental growth of ₹4.6 lakh crore post-pandemic in FY21. assessed the Bank’s economists.
“Despite the increase in CiC, cash as a percentage of GDP is declining and cash withdrawals from ATMs as a percentage of GDP are also declining. This clearly indicates that digital transactions continue to dominate our economy,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.
For example, CiC stands at ₹40 lakh crore, while the value of a one-month UPI transaction is ₹28.0 lakh crore, which is 70 percent of the economy’s total currency.
Intriguingly, while the volume of cash in circulation has continued to grow, the ‘cash-to-GDP’ ratio has declined in recent years from 14.4 percent in FY21 to 11 percent in FY26, according to SBI Research.
“…the direction of change in the currency and GDP may be the same, but incremental GDP growth is now financed less by cash and more through the UPI,” the economists said.
Referring to the Karnataka Commercial Taxes Department issuing around 18,000 GST notices to small traders and sellers between 2022 and 2025 for UPI transactions exceeding the registration threshold of ₹40 lakh, SBI economists felt that this would have acted as a disincentive on UPI transactions, leading to an increase in the number of ATMs.
They felt that the above-mentioned news may have pulled back UPI transactions not only in Karnataka but also in certain other states (such as West Bengal and Karnataka) due to its signaling effects.
Cash holdings have increased
The SBI researchers noted that the motive to hold cash has increased, especially in rural areas, with low interest rates and propensity for consumption. Deposit growth remained sluggish during the current FY26 and grew by 10.6 percent at the end of January 2026
“Our estimated function of increased demand for money, using GDP, UPI and other variables, shows that demand for money is positively correlated with GDP, although statistically insignificant and negatively correlated with interest rates.
“In other words, with the increase in GDP, the demand for currency increases, but not to the same extent as the UPI and cash substitution. Falling interest rates may also have resulted in higher precautionary demand for money,” the economists said.
Recycling of precious metals
With the rise in precious metal prices, there could have been a rising currency in circulation due to recycling of gold/silver from households, according to SBI Research.
Recent price increases have allowed households to cash out some of their holdings, leading to the increase in the amount of cash in circulation (CiC) in the economy. Further, the reduction in GST and income taxes has acted as an inventive tool to boost household consumption.
The economists highlighted that with the withdrawal of the ₹2,000 note (RBI announced this on May 19, 2023) and by the end of March 2025, the share of the ₹500 note increased by 8.9 per cent in terms of value to 86.0 per cent and by 3.0 per cent in terms of volume to 40.9 per cent.
In terms of value, the share of ₹100 notes has increased by 1.0 per cent to 4.7 per cent in 2025 and of ₹200 notes by 0.8 per cent to 0.8 per cent, compared to 2023.
For public convenience, the RBI directed banks (on April 28, 2025) to increase denominations of Rs 100/200 in ATMs and ensure that 96 percent of ATMs should dispense 100/200 notes by the end of March 2026.
SBI then used the currency chest data to study the behavioral changes in the use of currency denominations.
The analysis shows that the share (in value) of ₹500 notes could have increased by 4.4 percent in the current fiscal (April 25-Jan’26). However, the share of all other large denomination notes (such as ₹100/200) showed a decline over the same period
Moreover, according to NPCI, on a volume basis, the average ticket size of P2M transactions below ₹500 has a whopping 86 percent share in the total UPI transactions. So. The replacement of small denomination notes by UPI is unlikely to take place completely, SBI Economists said.
Published on February 16, 2026
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