During the festive season, cash withdrawal through ATM and micro ATM clocked a growth of 29 per cent in value during the Diwali week, as compared to the prior week, whereas credit and debit card transactions registered a decrease of 4 per cent and UPI and IMPS transactions registered a growth of 5 per cent in this period, revealed latest data by India1 Payments.
Cash continues to grow across India, clocking a CAGR of 11.2 per cent in Q2 over last 5 years, wherein small cities and towns dominate this trend.
Semi urban and rural (SURU) areas have garnered 75 per cent of all the net incremental ATMs rolled out in the last 5 years, with White label ATM operators (WLAOs) contributing to two-third of all net additional ATMs in SURU areas, the data highlighted.
“Timely cash availability to customers even in the remotest corners of the country has been propelling the usage of cash. The overall ATM industry witnessed a stellar growth of 26 per cent during the festival week. This shows that irrespective of rise in digital payments, cash continues to be a preferred mode of transaction during the festive season,” said K Srinivas, MD and CEO, India1 Payments.
Recent data released by RBI revealed that during the week ended November 17, currency in circulation dropped by Rs 5,934 crore to Rs 33.6 lakh crore. However, in the festive month of October 2023, UPI increased (month-on-month) by 85.3 crore transactions of Rs 1,36,600 crore in value terms.
A recent RBI paper said that the transactional use of cash is showing signs of decline, while the precautionary and store-of-value motives significantly influence the demand for currency in circulation (CiC).
“Due to increased transactional activity, it also underscores the significance of precautionary variables in determining cash demand. Overall, however, the ongoing rapid growth momentum in digital payments has the potential to moderate the positive income effect on currency demand,” the paper said.
Currency in circulation during the current financial year has declined by Rs 22,721 crore. Money supply grew by 11 per cent year-on-year as against 7.8 per cent a year ago.
