Mumbai : A comprehensive report by SBI Research has revealed a fascinating paradox in India’s monetary landscape: Currency in Circulation (CiC) has hit a historic peak of ₹40 lakh crore as of January 2026, growing at 11.1% year-on-year. This surge comes despite a record-breaking expansion in digital payments, with UPI transactions reaching new heights. The report highlights that while the absolute volume of cash is rising, the "Cash-to-GDP" ratio has actually moderated to approximately 11.5%, suggesting that cash is increasingly being used as a store of value rather than just a medium of exchange.
The research points to several factors driving this "cash puzzle," including a rise in ATM withdrawals, which grew by 9.3% YoY in November 2025. Interestingly, the demand for high-denomination notes remains robust, reflecting a global trend where cash is held for precautionary motives and as an asset class during periods of economic shifts. The report also notes a shift in household savings behavior, with a slight decline in net financial savings as consumers pivot towards physical assets and higher consumption.
A critical takeaway from the SBI Ecowrap report is the warning against any move to disincentivize digital payments. "The bottom line is—never disincentivize digital payments or UPI," the report emphasizes, noting that the co-existence of high cash levels and high digital penetration is a unique feature of the Indian economy. To sustain the transition toward a less-cash society, the report advocates for maintaining the ease and cost-effectiveness of digital transactions while recognizing the enduring role of cash in small-value transactions and rural economies.