People hoarding cash like never before amid economic uncertainty; currency with public at record high

By: |
Updated: Jun 05, 2020 6:55 PM

The currency with the public stood at over Rs 25 lakh crore by the week ending May 22, 2020.

cash in hand, currency with public, cash stack, demonetisation, note ban, The coronavirus-led lockdown played a major role in the rise of currency with the public.

As uncertainty prevails due to the coronavirus pandemic, people have stacked cash like never before, taking the currency with the public to a record high level. The currency with the public stood at over Rs 25 lakh crore by the week ending May 22, 2020, according to RBI’s weekly supplement report. This is a rise from Rs 23.5 lakh crore by the week ending March 31, when the nationwide lockdown just started. Even as digital transactions witnessed a substantial rise after Prime Minister Narendra Modi demonetised high-value currency notes on November 8, 2016, the usage of cash is still on a rise, that too at a significant pace.

To put it in context, the currency with the public was Rs 17 lakh crore by the week ending October 18, 2016, which has shot up by Rs 8 lakh crore in mere three-and-a-half years. The coronavirus-led lockdown played a major role in the rise of currency with the public. As lockdown was new to Indians, the uncertainty over how the things will work out forced people to go for panic buying of groceries, other essential items, and hoard cash.

Also Read: UPI, mobile wallet, cards not working in remote areas? RBI fund to take digital payments far and deep

Even now, when the lockdown is almost lifted and the operations of most of the businesses and industries are allowed, the uncertainty encompassing the market has kept consumer confidence at a low level. Following the low confidence, financial crunch, and rising number of coronavirus cases, increasing liquidity by holding more cash has been perceived as the most secure option. 

Meanwhile, to discourage extensive usage of cash, the Reserve bank of India today announced the creation of Payments Infrastructure Development Fund (PIDF), which is aimed at establishing adequate facilities to execute digital transactions. The fund will be used to deploy Points of Sale (PoS) infrastructure in tier-3 to tier-6 centres and north-eastern states. RBI will make an initial contribution of Rs 250 crores to the PIDF, and the remaining contribution will be done by card-issuing banks and card networks operating in the country.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Indian economy on brink of extinction; faulty climate policies to wipe out nearly entire GDP
2Kerala’s unhealthy addiction to remittances puts it in tight spot; foreign money becomes scarce
3EU forecasts deeper economic hit from coronavirus pandemic