Three years since demonetisation, the amount of cash among Indian public has increased significantly and its rate has been faster than the GDP growth of the country. Along with it, digital payments especially those on the Unified payments interface (UPI) have seen alarming rise.
According to a data shared by Reserve Bank of India, the public held ₹20.49 lakh crore in cash as of September 2019, the latest data available, which is 13.3% more than the figure for the corresponding month of 2018. This data also presented that the cash held by the public made up 96% of the money in circulation, with most of the rest deposited in banks. In December 2016, one month after demonetisation and the enforced deposits in banks, this percentage stood at 83%.
“Post-demonetisation, there was no option but to turn to digital modes of payments. That has changed now,” Kunal Bajaj, head of wealth management in MobiKwik, told a daily. “However, what it did was help convert a lot of users. People realised that it is much more convenient, secure and much more seamless especially for online purchase.”
As a result of demonetization, the value of transcations by 4 major modes in India – UPI, debits card, mobile banking and prepaid outlets has seen rapid rise over the last three years. But it is still a long way to go for digital platforms to take over cash transactions.
We are seeing a very strong customer adoption for digital payments, and this will need sustained efforts for a few years to get more and more customers on-board,” said Hemant Gala who is the head of payments, banking and financial services in PhonePe. “This is a journey of adoption, with focus on products and right use cases we will see a significant share of payments moving from cash to digital.”