Demonetisation fallout: Demand for cash increases by 7% since note ban, says RBI data

Even though the country is still recovering from the ripples of demonetization, it's primary purpose, which was to push India towards a cash-less economy, seems far from sight. A recent RBI report says that despite a spike in digital transactions, the demand for cash has increased by 7 per cent since the centre announced note ban in November 2016.

Currency with the Public (CwP) is a term referred to as people's demand for cash. The central bank report says there has been 7 per cent rise in demand for hard currency in April. It reported total CwP worth Rs 18.25 trillion in India till April 31, 2018, compared to pre-demonetisation period when the CwP was $17 trillion.

The Narendra Modi government in November 2016 had banned old currency notes of Rs 500 and Rs 1,000, which comprised over 80 per cent the country's cash, to curb black money and promote digital transactions.

Ever since the currency ban, the government took a series of steps like Jan Dhan Yojana to bring the population not connected with banks under the banking system. Around 80 per cent people of India today have bank accounts. A Business Standard report said though there's been around 79 per cent rise in people having bank accounts since the Modi government came to power in 2014, over half the bank accounts (around 38 per cent) have been found inactive due to various reasons like insufficient balance.

The government, however, has also taken several steps to progress towards the cash-less economy. Due to the Jan Dhan Yojana alone, the centre has been able to connect over 310 million people with the banking system, and their investment totals around $812 billion in May. The RBI data says around 7.68 million credit cards and 6.18 million debit cards were included in the banking system between March 2017 and March 2018 alone. As of May 2018, total 37.5 million credit cards and 861 million debit cards have been issued. The RBI data says payment terminals have also doubled to 3 million from 1.5 million before November 2016; the number is expected to touch the 5-million mark by the 2018 end.

Unified Payments Interface (UPI), an instant real-time payment system developed by the National Payments Corporation of India facilitating inter-bank transactions, has already closed around a billion transactions worth Rs 1 lakh crore in 2017-18. The interface registered 190 million monthly transactions in April 2018, which could easily cross the 200-million mark in May.