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SBI Report: Cash and Digital Both Indispensable for India, CBDC Usage Needs Boost

A new SBI Research report highlights that both cash and digital payments are indispensable for Indians, serving complementary roles. The report notes that CBDC (e-Rupee) circulation remains low at Rs 1,016 crore, requiring more awareness and fintech partnerships. Per capita currency in circulation has grown slower than GDP, with the gap nearly equivalent to UPI transaction values. The report also reveals a significant increase in the gap between cash in circulation and ATM withdrawals, attributed to precautionary cash holding amid global uncertainties.

Key Points: SBI: Cash & Digital Indispensable, Time to Boost CBDC Usage

  • Cash and digital are complementary, not substitutes
  • CBDC circulation is only Rs 1,016 crore as of March 2025
  • Per capita CiC growth (9.0%) lags GDP growth (9.4%)
  • Gap between CiC and ATM withdrawals surged 5x to Rs 9,127 by FY26
  • Rs 500 note dominates 86% of currency value; RBI pushes for smaller denominations
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Both cash and digital indispensable for Indians, time to boost CBDC usage: SBI report

SBI report says cash and digital payments complement each other in India. CBDC circulation is low at Rs 1,016 crore, needing awareness and fintech partnerships.

"Both cash and digital are indispensable for India and complement each other - SBI Research report"

New Delhi, April 24

Both cash and digital are indispensable for India and complement each other but there is a marginal substitutability, as a household may use UPI for many retail small payments but still keep cash at home for emergencies or informal transactions, a new SBI Research report said on Friday.

Notably, India has launched Central Bank Digital Currency (CBDC) but the e-Rupee circulation is at a very small amount of Rs 1,016 crore till March 2025, and there is a need for further efforts in awareness, usability, and strategic partnerships with fintech applications are essential to boost their usage, said the report.

The movements in per capita CiC (currency in circulation) with the per capita GDP reveals some interesting trends.

The per-capita GDP (at current prices) has increased from merely Rs 71,609 in FY12 to Rs 2,51,393 in FY26, a CAGR of 9.4 per cent.

During the same period, the per capita CiC has increased from Rs 8,762 to Rs 29,324, a CAGR of 9.0 per cent.

"The per-capita CAGR of CiC is still lower than the GDP. Interestingly, we found that this gap (0.4 per cent) in CAGR between CiC and GDP is nearly equivalent to UPI. The per capita transaction UPI is Rs 1,301 in FY26," the findings showed.

However, a per capita UPI transaction needs to be interpreted carefully, as an individual can make many UPI transactions say over a point of time as opposed to cash just because of sheer convenience, it explained.

While ATM cash withdrawals are using primarily for transactions purposes, the CiC included all the cash that is used for transaction as well as precautionary motive.

"Our research indicate that this gap between per capita CiC and ATM withdrawal has increased from merely Rs 1,804 in FY24 to Rs 9,127 in FY26 (a whopping 5-times increase). We believe this gap is primarily because of precautionary motive of using cash by individuals," the report showed.

One possibility of using money for precautionary motive could be heightened uncertainty as is being currently witnessed because of the ongoing war. This had happened during Russia-Ukraine war too.

In value terms, denomination-wise share is very skewed in India. Rs 500 denomination accounted for 86 per cent of share as of March 2025 (significantly increased from 77 per cent as of March 2023).

This uneven distribution has prompted RBI to direct all banks and white label ATM operators (WLAOs) to ensure that their ATMs dispense Rs 100 and Rs 200 denomination banknotes on a regular basis.

"Our results indicate that the share of Rs 500 note (in value terms) is constant around 86 per cent, while the share of Rs 100 note has increased from 6.2 per cent as of March 2025 to 8.2 per cent in March 2026," said the report.

- IANS

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Reader Comments

S
Sneha F
Interesting data about Rs 500 notes dominating. But honestly, I keep cash at home for "rainy day" emergencies - what if phone battery dies during a power cut? UPI is great for quick payments but cash gives that psychological comfort. CBDC needs offline functionality if they want it to compete! 🤔
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James A
As someone who moved back to India from the US, I can see both sides. Digital is convenient but Indians love their cash - it's part of our culture for weddings, festivals, and temple offerings. The real challenge for CBDC is privacy concerns. People don't want every transaction tracked, especially in a country with high tax evasion. Need to build trust first.
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Rohit L
The precautionary motive is spot on - look at global uncertainties, wars, inflation. Even I've started keeping extra cash at home. But here's a criticism: CBDC awareness is near zero in tier-2/3 cities. SBI itself should do more to educate customers. Also, why not make e-Rupee work without internet? That would be a game-changer for villages! 🔥
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Kavya N
Loving the data-driven analysis! The gap between CiC growth and GDP growth being almost equal to UPI transaction value is such a cool insight. But let's be real - cash is still needed for informal sector workers (maids, plumbers, etc.). Digital payments are great but imposing full digital is not practical. Let both coexist peacefully! 🙏
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Ananya R
Rs 1,016 crore CBDC circulation is laughably low for

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