ATM Withdrawals Lag Behind Rising Cash Supply: SBI Report

 India is witnessing a notable rise in cash holdings alongside rapid growth in digital transactions, indicating a shift in behavioural patterns rather than a decline in digital adoption, according to a recent State Bank of India report. 

Key Development 

The difference between per capita currency in circulation and ATM withdrawals has expanded significantly, reaching ₹9,127 in FY26 compared to ₹1,804 in FY24.  

This sharp increase points towards higher precautionary cash holding, driven by global uncertainties and patterns observed during past disruptions. 

Cash Growth and Digital Trends 

Currency in circulation rose 11.9% year-on-year to ₹41.6 trillion in FY26, with an incremental increase of ₹4.4 trillion,the highest since the post-demonetisation phase.  

At the same time, digital transactions continued to surge, with UPI transaction value increasing 20.6% to ₹314 trillion and volumes rising 30% to 241.6 billion. 

Despite the rise in cash, the cash-to-GDP ratio declined from 14.4% in FY21 to 12.1% in FY26, suggesting that currency expansion remains broadly aligned with economic growth.  

Over the long term, per capita currency holdings have grown at a slightly slower pace than income, reflecting the increasing role of digital payments in everyday transactions. 

Behavioural And Structural Insights 

The coexistence of rising cash levels and digital payments indicates complementary usage rather than substitution. 

While UPI is widely used for small-value transactions, most below ₹500, cash continues to serve as a store of value for contingencies and informal usage. 

In terms of denomination trends, ₹500 notes account for the majority share of total currency value, while the proportion of ₹100 notes has increased following policy measures aimed at improving availability of lower denominations.  

Meanwhile, central bank digital currency (CBDC) remains at an early stage, contributing a negligible share to overall currency in circulation. 

Read More: RBI Flags Stronger WALR Transmission by Private Banks Than PSBs! 

Conclusion 

The rise in cash holdings alongside strong digital transaction growth reflects a dual-payment ecosystem, where precautionary behaviour and convenience-driven usage continue to shape India’s evolving financial landscape. 

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