Reserve Bank of India warns digital payments fail to reduce cash demand

India went all-in on digital payments. Cash didn’t get the memo. Reserve Bank of India Deputy Governor Shirish Chandra Murmu laid out a striking contradiction during a Bank Indonesia event in Jakarta on August 13: despite a decade of surging digital payment adoption, demand for physical currency in India keeps climbing at double-digit rates. The RBI has dubbed this the “cash paradox,” and it’s creating real headaches for the central bank’s ability to forecast how much money it actually needs to print. The numbers behind the paradox India currently has roughly 176 billion banknotes in circulation. To keep that stock fresh and growing, the RBI churns out 28 to 30 billion new notes annually across six denominations while retiring about 21 billion worn-out bills. That’s a massive logistical operation serving 1.42 billion people through a decentralized distribution network. The paradox is this: cash’s share of total transactions is declining. Digital payments, led by the Unified Payments Interface (UPI), have eaten into the role physical currency plays in everyday commerce. But the absolute volume of cash in the system keeps growing, and growing fast. Murmu pointed to several variables ...