The Reserve Bank of India released data stating that cash with the public rose by Rs 15,919 crore in the fortnight ended April 23 to cross the Rs 28-lakh crore mark for the first time.
In the previous fortnight that ended April 9, cash with the public rose by Rs 30,191 crore. Since February 1, cash with the public is up by Rs 96,776 crore.
An uncertain environment leads to a rise in cash holding by the public. However, growing calls of nationwide and statewide lockdowns have forced people to withdraw money from banks and keep cash with them, both for medical exigencies and basic needs. Banking experts are predicting that in the coming weeks, this holding of cash by the public may rise further due to calls for nationwide lockdown from the both domestic and international fraternity.
Bankers say people have started to accumulate cash in anticipation of more stringent lockdown measures the government may announce in the future. A banker, who did not wish to be named, told The Indian Express that several individuals are withdrawing cash to meet any urgent requirements in case of a health emergency.
Last year, after the government announced a stringent lockdown in March, there was a big jump in currency with the public. Between March and June 2020, the currency with public shot up by Rs 3.07 lakh crore, making it Rs 25.62 lakh crore from Rs 22.55 lakh crore. In the wake of lockdown, people withdrew cash heavily from bank branches and ATMs between March and June 2020.
The rise in currency with the public between December and January was only Rs 33,500 crore. Also between July and September 2020, it was Rs 22,305 crore. A jump was seen in the festive months of October and November as the currency with the public rose by Rs 88,300 crore.
According to the RBI, currency with the public is calculated after deducting cash with banks from total currency in circulation — which includes notes in circulation, rupee coins and small coins, refers to cash or currency within a country that is physically used to conduct transactions between consumers and businesses.
It is important to note that the currency with the public has jumped by 56 percent (Rs 10.06 lakh crore) since the government announced demonetisation on November 8, 2016. As on November 4, 2016, the currency with public stood at Rs 17.97 lakh crore and currently it amounts to Rs 28.03 lakh crore.
One of the reasons the government cited for the demonetisation was to make India a cashless society.