3 days ago

Cash is King, says RBI Annual Report for FY26

Cash remains the King in India, says the Reserve Bank of India (RBI) Annual Report for 2025-26. The total value of banknotes in circulation has surged by 11.8% to reach ₹41.23 lakh crore, pushing India’s currency-to-GDP ratio up to 12.1%. 

To meet this rising demand, the RBI has shifted its focus toward higher-value notes, cementing the ₹500 bill as the absolute backbone of the cash system—accounting for a staggering 85.5% of the total value and 41.2% of the physical volume in circulation.

However, the currency management report also highlights a significant 23.5% drop in banknote printing costs, which fell to ₹4,875.2 crore due to reduced order volumes placed with printing presses. 

In contrast to the booming demand for physical cash, the RBI’s retail Central Bank Digital Currency (CBDC) pilot ran into a speed bump. The total value of the digital rupee (e-Rupee) in circulation fell by 24.1% to ₹771.7 crore, pointing that the digital currency has yet to gain widespread traction against traditional cash and established UPI systems. 

Moving forward into 2026-27, the central bank plans to focus heavily on improving banknote durability, introducing enhanced security features to combat counterfeiting, and pushing for greater domestic self-sufficiency in currency paper production under its Utkarsh 2029 strategy.

Among other points, the report says banknote integrity will be improved through upgraded and entirely new security features which would proactively curb counterfeiting as well.