Currency circulation rises 5.8% as ₹2,000 note impact fades: RBI

RBI's annual report shows recovery in currency circulation post ₹2,000 note withdrawal, surge in e-rupee usage, and strong digital payment adoption in FY25

The growth of the currency in circulation, the major constituent of reserve money with a share of 76.9 per cent, recovered to 5.8 per cent during 2024-25 from 4.1 per cent a year earlier because the impact of the withdrawal of ₹2,000 notes had subsided, according to the Reserve Bank of India’s (RBI’s) Annual Report 2024-25. 

 

The withdrawal of ₹2,000 banknotes from circulation began on May 19, 2023. Around 98.2 per cent of ₹2,000 notes, adding up to ₹3.56 trillion, returned to the banking system as on March 31.

 

The facility for exchanging and depositing ₹2,000 banknotes is available at 19 issue offices of the central bank.

 

 

The value of the e-rupee in circulation increased 334 per cent during 2024-25, according to the Annual Report. At the end of March, the pilot project of the central bank digital currency (CBDC) was expanded to 17 banks and six million users. Moreover, the scope of the wholesale CBDC was further expanded by including four standalone primary dealers.

 

The currency-gross domestic product ratio moderated further with the increased use of digital payments, including the central bank digital currency (CBDC). Retail digital payments rose 17.9 per cent in value terms and 35 per cent in volume terms during 2024-25. 

 

On the asset side, the expansion of M3 (money supply) was driven by bank credit to the commercial sector, which grew 11.8 per cent in 2024-25 against 15.6 per cent a year earlier, according to the RBI report.

 

M3, known as broad money, consists of the currency with the public and aggregate deposits with banks. On the liabilities side, M3 recorded a growth rate of 9.6 per cent on March 21, 2025, as against 11.2 per cent a year earlier, driven by bank deposits.

 

The value and volume of banknotes in circulation increased 6 per cent and 5.6 per cent, respectively, during 2024-25. During the same period, the share of ₹500 notes was at 86 per cent and declined marginally in value terms. In volume terms, ₹500 notes, at 40.9 per cent, constituted the highest share of banknotes in circulation, followed by ₹10 notes, at 16.4 per cent, according to the RBI report.