Key Details
In a keynote address on global cash management, RBI Deputy Governor Shirish Chandra Murmu outlined the scale of India’s currency system and identified demand forecasting, banknote durability and environmental sustainability as its next major challenges.
Currency-management indicator | Why It Matters |
|---|---|
176 billion banknotes in circulation | Shows the scale of India’s continuing reliance on physical currency |
28–30 billion notes produced annually | Requires substantial manufacturing and distribution capacity |
Around 21 billion notes disposed of annually | Makes durability and sustainable disposal economically significant |
Six banknote denominations | Production must serve different transaction values and user requirements |
More than 2.5 lakh ATMs and cash dispensers | Constitute a major channel for last-mile currency access |
Four printing presses and domestic paper and ink facilities | Support greater self-reliance in banknote production |
Cash and Digital Payments Are Growing Together
RBI describes a “cash paradox”: digital payments are expanding and cash is declining as a share of transactions, yet currency in circulation continues to grow.
Cash remains important for rural and semi-urban communities, low-income households, older users, small businesses and areas with weak connectivity or limited digital acceptance. RBI must therefore forecast both transactional cash demand and replacement demand for worn or damaged notes.
The speech does not specify the period behind its reference to double-digit currency growth.
RBI Is Exploring Longer-Lasting Notes
RBI is examining two ways to extend banknote life:
protective surface coatings; and
polymer notes for lower denominations.
No pilot, denomination or implementation timeline has been announced.
Longer-lasting notes could reduce printing, transport, sorting and destruction costs, but any shift would also require assessment of security, production cost, usability, recyclability and machine compatibility.
Currency Chests Sustain Last-Mile Cash Access
RBI distributes currency through 19 regional offices and a wider network of currency chests operated by designated banks and government treasuries.
These chests supply fresh currency, receive surplus cash, sort returned notes and send unfit notes to RBI for disposal. From there, cash reaches users through bank branches, ATMs, cash dispensers and Business Correspondents.
The network also supported large-scale cash operations during demonetisation in 2016 and the withdrawal of ₹2,000 notes from 2023.
Sustainability Is Becoming Part of Currency Management
RBI is also seeking to reduce the environmental footprint of cash through more efficient distribution, longer-lasting banknotes and productive use of material recovered from destroyed notes.
The relevant comparison between paper and polymer will therefore depend on the full lifecycle — manufacturing, transport, durability, replacement frequency and end-of-life treatment.
What Is a Currency Chest?
A currency chest is a secure facility operated by a designated bank or government treasury on RBI’s behalf. It stores and distributes currency, collects surplus and unfit notes and reports transactions to RBI in real time. The cash held inside remains RBI’s property.
Policy Relevance
Digitalisation does not eliminate the need for cash infrastructure. Currency access remains part of financial inclusion and payment-system resilience.
Durability could reduce recurring costs. Notes that remain usable for longer may lower printing, transport, processing and disposal requirements.
Cash planning must reflect unequal dependence. Aggregate transaction trends can conceal continued reliance among particular regions, occupations and demographic groups.
Distribution networks provide operational resilience. Cash remains important during connectivity failures, disasters and interruptions to digital-payment systems.
Material changes require lifecycle evaluation. Polymer or coated notes should be assessed against security, cost, environmental impact, accessibility and machine compatibility.
Relevant Question for Policy Stakeholders: Can RBI reduce the cost and environmental footprint of physical currency while preserving universal access and public confidence in cash?
Follow the Full Speech Here: RBI Deputy Governor Shirish Chandra Murmu’s keynote address on collaborative cash ecosystems