Cash in Circulation Remains High Despite Demonetisation

Currency in circulation in India continues to rise despite the demonetisation of high-value banknotes, according to a report released by the Reserve Bank of India (RBI) titled State of the Economy. As of October 15, the total value of currency notes in circulation stood at ₹43.46 lakh crore, marking a 13.5% increase compared with the same period last year. The report also noted that currency in circulation (CIC) was 13.3% higher than at the end of September last year. The current level is the highest recorded in the past five years, highlighting the continued growth in demand for cash across the country.

The RBI’s reserve money also reached a record ₹53.24 lakh crore at the end of September, representing a 10.3% rise from the corresponding period last year. The increase was largely attributed to FCNR(B) deposits mobilised by banks from Non-Resident Indians (NRIs) under a special deposit scheme announced by the RBI on June 8. According to the supplied report, banks raised around $133 billion, equivalent to approximately ₹12.56 lakh crore, through the scheme. Large-scale currency printing was another factor contributing to the rise in currency circulation. The resulting increase in banking-system liquidity created challenges for banks in deploying the additional funds. To manage the surplus, the RBI withdrew nearly ₹8.8 lakh crore through open market operations. Currency in circulation is expected to ease further during the ongoing festive season as people increase their spending and make more digital payments.