Ten Years After Demonetisation: Cash Remains Firmly in Use Despite Digital Payments

The note ban was announced in November 2016 with the promise of curbing black money, fake currency and illegal funding. It was also expected to push people towards digital payments and reduce the economy’s dependence on cash. 

A decade later, the numbers suggest that cash has not lost its place in everyday transactions. Currency with the public has continued to grow, despite the wider use of digital payment options. 

Cash Holdings Have Continued to Rise 

The withdrawal of high-value notes caused an immediate disruption. Businesses faced a cash shortage, demand weakened and people spent hours queuing outside banks and ATMs. Small businesses were among those hit by the sudden loss of liquidity. 

Cash holdings rose sharply again in 2020-21, when the Covid-19 lockdown prompted households to keep more money aside for daily needs and emergencies. 

By October 16, 2026, currency with the public had increased by ₹5.26 lakh crore during the calendar year, a rise of 14.1%, according to RBI data. 

What Does the Currency-To-GDP Ratio Show? 

The currency-in-circulation-to-GDP ratio offers another way to track the economy’s reliance on cash. It stood at 8.7% in 2016-17 and climbed to 14.4% in 2020-21. By FY26, it had settled at 12.1%, the same level recorded in March 2016. 

The ratio was above 16% in Japan, compared with 7.3% in the US and 10.2% in China. A higher figure points to greater use of physical currency, but does not by itself indicate how developed an economy is. 

Digital Payments Grow, But Cash Remains Relevant 

Digital transactions have expanded considerably. In FY2025-26, credit, debit card and wallet payments together recorded around 151,611 lakh transactions worth ₹30.31 lakh crore. 

Wallets accounted for the largest share of transaction volumes, while credit cards contributed the biggest share of transaction value. The figures show that digital payments have become an important part of the financial system, even as people continue to hold and use cash. 

Read More: NIFTY FINANCIAL SERVICES Index Climbs Above 27,200 Mark in Intraday Trade on November 9, 2026! 

Conclusion 

Ten years after demonetisation, India’s payment habits have changed, but cash has not disappeared. Digital payments have gained ground, yet currency remains an important part of daily economic activity. 

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