“Currency in circulation continues to grow at double-digit rates even as cash’s share of individual transactions declines, thanks to growing digital payment adoption. That combination makes future demand harder to predict, which complicates our planning for production and distribution capacity,” Murmu said at a meeting of central bankers held in Jakarta on August 13.
He said that the adoption of digital payments in India has been revolutionary, yet cash in circulation has not declined, especially in rural and semi-urban areas, among low-income groups, older populations, and small businesses.
India produced between 28 and 30 billion banknotes annually across six denominations over the past few years and disposed off roughly 21 billion pieces a year. At present, 176 billion banknotes are in circulation in the counry.
In contrast, around 56 billion US dollar bills and 30 billion euro banknotes were in circulation at the end of last year, Murmu said in his keynote address at the cenral bankers’ event on global cash management, organised by Bank Indonesia.
To be sure, India’s high number of banknotes is partly due to the higher weightage on lower-value notes, which means more pieces change hands for the same value of transactions.
“We are exploring ways to extend the life of banknotes, including surface coatings on the substrate, and polymer notes for lower denominations,” the depyu governor said, adding that the country is working to reduce the carbon footprint of the cash cycle.
