Currency in circulation hits Rs 29 lakh crore on 2nd wave
According to RBI data, currency with the public has risen to Rs 29,07,067 crore as of April 23, 2021 — an increase of Rs 7,352 crore over the previous week. On March 26, the amount had stood at Rs 28,58,547 crore.
Interestingly, the hoard of cash is happening even as the use of digital channels for transactions is growing every month. While UPI crossed 2.3 billion transactions in March 2021 for a value of Rs 5 lakh crore, debit card use has also been on the rise after the lockdown was lifted. Bankers attribute this behaviour to rising insecurity, which prompts people to hold more cash at home during a lockdown despite there being fewer avenues to spend the money.
According to ATM operators, although monthly withdrawals have not hit the prepandemic peak, depositors are not returning the money they have withdrawn. Also, the average value of cash withdrawal is on the rise despite a fewer number of ATM transactions. Pre-pandemic the average withdrawal was around Rs 4,000 which has now gone up to Rs 4,500.
Bankers say that the currency in circulation could rise further if the government were to introduce a cash-transfer scheme. Although most of the Jan Dhan Yojana account holders have a debit card, last years’ experience showed that the tendency among accountholders was to immediately withdraw funds from their account.
In its recent report on the trend and progress of banking, the RBI has said that currency with public surged last fiscal in response to the “Covid-induced dash for cash”, while solvency issues related to a private sector bank also brought about some reassignment of deposits.
The demand for cash is now prompting ATM companies to step up their investments after a period of decline. ATM numbers had been dropping in recent months following banks’ decision to rationalise their network and the inability of some white label ATM network companies to meet their targets.