India's Currency In Circulation At Record Highs: Rs 40 Lakh Crore In January; Even As UPI Transactions Dominate

Currency in circulation (CIC) has reached new record highs even as volumes in UPI transactions surged, a report by SBI Research said. The rise in CIC was led by higher withdrawals from ATMs, which increased the propensity to hold cash, particularly in rural areas, along with a rise in precious metals prices.

CIC in India reached a new high in late 2025 and continued in early 2026, the report said. CIC was at Rs. 40 lakh crore by the end of January, rising 11.1 per cent on year. During the same period in 2025, the rise was just 5.3 per cent. On an incremental basis, CIC rose by Rs. 2.76 lakh crore year to date, or a rise of 3.11 times since last year.

The report attributed the rise in CIC to higher ATM withdrawals in states such as Karnataka owing to GST notices received by small merchants, which also saw a ripple effect in states like West Bengal and Kerala. Karnataka Commercial Taxes Department issued around 18,000 GST notices to small traders and vendors who had UPI transactions of more than Rs. 40 lakh between 2022 and 2025 as the registration threshold crossed. These notices could have been added as an incentive to reduce UPI transactions while increasing ATM transactions.

The report also pointed out that currency with public (CWP) has also risen along similar lines, reaching an all-time high of Rs. 39 lakh crore in January, forming nearly 97.6 per cent of the CIC. The rise in CWP in January was by 11.5 per cent, against only 5.4 per cent seen in the previous year. The report said that if current trends continue, CWP will surpass the post-COVID pandemic growth of Rs. 4.6 lakh crore seen in the financial year ending in March 2021.

“Despite an increase in CiC, cash as a percentage of GDP is declining, and ATM cash withdrawal as a percentage of GDP is also declining. This clearly indicates that digital transactions continue to dominate our economy,” Soumya Kanti Ghosh, group chief economic adviser at SBI, said.

UPI transactions amount to around Rs. 28 lakh crore in a month, which accounts for nearly 70 per cent of the total currency in the economy at Rs. 40 lakh crore. However, the report noted that the growth ratio of cash to Gross Domestic Product (GDP) has declined despite the rise in CIC. Cash-to-GDP ratio has fallen to 11 per cent in FY26 from 14.4 per cent in FY21, the report said.

“....The direction of change of currency and GDP may be the same, but incremental GDP growth is now being less financed by cash and more through UPI,” the report said.

Recycling in Gold, Silver Prices

The report noted that CIC also likely rose as more households were incentivised to recycle the gold and silver in their possession, due to a rise in precious metals prices. The recent surge in precious metal prices led households to cash out some holdings, which in turn led to a rise in CIC in the country. The report also attributed the GST rate rationalisation and change in income tax slabs to have boosted household consumption, which in turn also led to a rise in CIC.