The Bengaluru regional office of the Reserve Bank of India, has seen an approximate 13 percent surge in currency circulation amounting to Rs. 2.5 lakh crore post the first quarter of the 2023-24 financial year.
Cash still holds its ground in Bengaluru. The circulation of cash has surged despite the popularity of Unified Payment System (UPI) apps.
Abhiram, Senior Special Associate Officer (SAO), Reserve Bank of India (RBI), Bengaluru said that, at present the cash circulation among people of Bengaluru urban and rural has increased to 13 percent and stands at Rs. 2.5 lakh crore since the starting of the 2023-24financial year (FY).
Abhiram said, “It is an unexpected increment. In the last quarter of previous FY the circulation was only eight per cent compared to the last quarter of the FY 2022-23 and the pace of growing cash exchanges and transactions were stagnant at two per cent. But this time the surge is surprising even on a year-on-year (yoy) basis too.”
He added that in yoy comparison the cash transactions have increased by more than ten per cent in the second quarter of the FY 2023-24. It is a clear indication that cash is still dominant over other form of money exchanges.
Zakir Mehmood, Banker of a Scheduled Commercial Bank (SCB) said that the increase in cash transaction could be due to the recent festival season in India. Apart from that the pause in policy rates by RBI is also a factor in increasing liquidity and so it impacts the cash holding capacity of the public.
Even though people have the options of various modes of transactions, cash gives tough competition to digital transactions.
A garment vendor, Ramanna in Jayanagar said that from the last couple of months he noticed that he has been receiving more payments by cash than by UPI. “While shopping, people now-a-days are paying in cash more. Earlier, they were using mainly UPI,” he said.
V. Shanthi, a buyer said that she has both UPI and cash but she gives preference to UPI at the time of big payments like in malls and cash for small payments like auto fare. Shanthi also added that cash is the safest mode of doing transactions. There were many instances where Shanthi faced technical issues while making digital payments.
According to the RBI’s annual report, cash circulation has increased by 7.8 per cent in FY 23 that shows cash has again increased its presence.
Vishal Saxena, a financial expert from Bengaluru said that the currency increment was expected due to three reasons. First, RBI’s dovish monetary policy followed by rapid credit through Non-Banking Financial Corporations (NBFC) and the last reason is inflation.
Vishal predicts that in the near future, the usage of cash could surpass digital transactions.