Why Are Indians Keeping More ₹100 and ₹200 Notes at Home? RBI Data Reveals a Surprising Trend

Despite India's rapid shift toward digital payments, cash continues to play a vital role in everyday life. New data released by the Reserve Bank of India (RBI) shows that the amount of currency circulating in the economy has risen sharply, with many households and businesses choosing to keep more cash on hand as a precaution.

Interestingly, the increase is not being driven by high-value currency alone. Demand for lower-denomination notes, particularly ₹100 and ₹200 notes, has also grown, reflecting changing consumer behavior amid global economic uncertainty.

Here's what the latest RBI data reveals and why cash demand is rising even in the age of UPI.

Currency in Circulation Climbs to a Record Level

According to RBI data, Currency in Circulation (CIC)

reached ₹43.02 lakh crore in May 2026, compared with ₹38.36 lakh crore in May 2025.

This represents a 12.1% year-on-year increase, making it the fastest annual growth in cash circulation since the COVID-19 pandemic.

The figures indicate that while digital payment volumes continue to set new records, Indians are simultaneously choosing to keep more physical cash as a financial safety net.

Why Are People Holding More Cash?

Financial experts believe the increase in cash holdings is linked to heightened global uncertainty.

Several developments have contributed to precautionary cash accumulation, including:

• Geopolitical tensions in West Asia.

• Volatility in crude oil prices.

• Concerns about global economic growth.

• Uncertainty in international financial markets.

During periods of uncertainty, households and businesses often prefer maintaining higher liquidity to meet unexpected expenses or disruptions.

This behavior was observed during the COVID-19 pandemic and appears to be returning amid fresh global risks.

Smaller Currency Notes See Higher Demand

One of the more interesting findings from the RBI data is the growing preference for smaller-denomination currency notes.

While ₹500 notes continue to account for the largest share of currency in circulation, their proportion has declined slightly.

As of June 19, 2026:

• ₹500 notes accounted for 85.4% of the total value of currency in circulation, compared with 85.7% a year earlier.

• The share of ₹100 notes increased from 6.3% to 6.7%.

• ₹200 notes also registered a modest increase, rising from 5.03% to 5.1%.

This suggests that many people are preferring easily usable denominations for emergency cash reserves and day-to-day transactions.

Cash Growth Strongest Since the Pandemic

The latest rise in currency circulation marks the strongest pace of growth since the pandemic years.

During 2020, cash demand surged as people responded to lockdowns and economic uncertainty.

Although growth slowed in the following years, cash demand accelerated again during April and May 2026, with annual growth remaining above 12%.

The trend indicates that physical currency continues to retain public confidence during uncertain economic conditions.

Cash-to-GDP Ratio Also Moves Higher

The RBI data also shows an increase in the ratio of currency in circulation relative to India's Gross Domestic Product (GDP).

For FY 2025-26, the cash-to-GDP ratio rose to approximately 11.7%.

This indicates that despite the expansion of digital payments, cash continues to occupy a significant place within the Indian economy.

Digital Payments Continue to Grow Alongside Cash

India remains one of the world's largest digital payment markets.

UPI transactions continue to achieve record volumes every month, and digital payment adoption has expanded rapidly across urban and rural regions.

However, economists note that rising digital payments do not necessarily reduce the demand for physical cash.

Instead, both systems often grow together, serving different purposes.

Digital platforms offer convenience for daily transactions, while cash provides immediate liquidity during emergencies or periods of uncertainty.

Impact of Global Developments

Recent geopolitical tensions in West Asia have influenced global commodity markets, particularly crude oil.

Concerns over energy supplies, shipping routes and inflation have encouraged consumers and businesses to maintain additional cash reserves as a precaution.

Although India's economy has remained relatively resilient, changing consumer behavior suggests that many households are preparing for potential economic disruptions by keeping more cash readily available.