- Currency in circulation grew 11.4% in FY26, nearly double the previous year's increase
- Retail digital payments rose 26.9% by volume, with UPI transactions surpassing 200 billion
- Cash demand rose alongside digital payments, driven by welfare and government transfers
India is making more digital payments than ever before. Yet Indians are also withdrawing and holding more cash.
Currency in circulation grew 11.4% in FY26, nearly double the 5.8% increase recorded a year earlier, according to the Reserve Bank of India's latest annual report. During the same period, retail digital payments rose 26.9% by volume, while UPI transactions crossed 200 billion.
The figures underscores a shift in how Indians use money. Rather than choosing between cash and digital payments, households appear to be relying on both.
The trend challenges a common assumption that the growth of UPI and other digital payment systems would steadily reduce cash usage. Instead, the RBI's data shows that cash demand accelerated even as digital transactions continued to expand across the country.
The central bank said higher cash withdrawals were driven by several factors, including welfare measures introduced by state governments, compensation payments for crop damage, direct benefit transfers, higher consumer spending following GST and income-tax rate reductions, and increased demand for cash amid rising prices of precious metals.
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QR Codes And Cash Notes
India's digital payments ecosystem continued to expand during FY26. The RBI's Digital Payments Index rose further during the year, while UPI transaction volumes increased 30%.
At the same time, the currency-to-GDP ratio edged higher despite the rapid growth in digital payments.
The combination suggests that digital payments are becoming part of everyday transactions without necessarily replacing cash holdings.
For many households, cash continues to serve purposes that differ from digital payments, particularly when government transfers, local spending and savings behaviour influence withdrawal patterns.
Gold May Be Playing A Role
The RBI also pointed to rising prices of precious metals as one factor behind stronger cash demand.
Gold prices remained a major influence on household finances during FY26. The central bank noted that gold and silver accounted for nearly half of core inflation in the second half of the year. It also reported that the value of India's gold imports increased despite lower import volumes, as higher prices offset the decline in quantities imported.
The data suggests that households continued to allocate money towards gold even as prices climbed.
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