Despite digital surge, cash remains India's crucial payment mode: RBI's Murmu

Despite the rapid adoption of digital payments, cash remains a significant mode of payment in the Indian economy, according to Reserve Bank of India deputy governor Shirish Chandra Murmu. In a speech at the Global Cash Management 2026 discussion in Jakarta, Murmu emphasized that preserving trust in cash through clean notes, secure logistics, and a reliable currency ecosystem is crucial for maintaining monetary sovereignty.

The rapid growth of digital payments in India has created a paradox, as cash in circulation continues to grow at double-digit rates while its share of individual transactions declines. This trend poses challenges for the central bank's planning and production capacity. To address this issue, the RBI is exploring ways to improve the durability of banknotes, such as through the use of polymer notes for lower denominations.

Additionally, the central bank is examining methods to reduce the carbon footprint of the cash cycle, including optimizing the distribution network and improving the disposal of banknote briquettes. India's currency ecosystem is vast, with the RBI and government producing between 28 billion and 30 billion banknotes annually, across six denominations.

As of August 2023, about 176 billion banknotes were in circulation in the country. The RBI also emphasizes its role in maintaining self-reliance in currency production, owning and controlling banknote paper mills, currency printing presses, and ink production units.