India’s Cash-Digital Hybrid: Currency in Circulation and UPI Both Hit Record Highs in FY26

Mumbai : SBI Research’s latest Ecowrap report highlights a unique trend in the Indian economy, characterizing it as a "hybrid payments equilibrium" where physical cash and digital payments are both achieving record growth simultaneously.

In FY26, Currency in Circulation (CiC) reached an all-time high of Rs 41.6 trillion, marking a growth of 11.9%. Simultaneously, UPI transactions soared, reaching a value of Rs 314 trillion—a 20.6% increase—and a volume of 241.6 billion transactions.

The Precautionary Motive for Cash The report identifies a significant increase in the "precautionary motive" for holding cash, which is distinct from transaction-based usage. Analysis reveals that the gap between per capita CiC and ATM withdrawals has expanded 5-fold, rising from Rs 1,804 in FY24 to Rs 9,127 in FY26. Experts believe this suggests that while UPI is increasingly used for small-value, high-frequency daily transactions, individuals are retaining physical cash as a safety net against uncertainties, potentially amplified by social media-driven perceptions of systemic risk.

Denomination Trends and CBDC Data indicates a skewed denomination distribution, with Rs 500 notes accounting for 86% of the share in value terms as of March 2026. To address this, the RBI has directed banks to ensure regular availability of Rs 100 and Rs 200 notes through ATMs. Regarding the Central Bank Digital Currency (CBDC), the report notes that while e-Rupee circulation has grown, it remains a small fraction—only 0.02%—of total currency in circulation, highlighting the need for increased awareness and strategic fintech partnerships to boost adoption.

Ultimately, the report concludes that India is not becoming more cash-intensive; rather, as the economy expands, both systems are complementing each other to serve different consumer needs.