What is Currency Circulation? And its impact on ATM/CRM Deployment | AGS India

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What is Currency-in-Circulation? India has made
great strides in establishing itself as a
less-cash economy. Testifying this, the RBI
governor, Shaktikanta Das, in a conference,
recently revealed that about 1,050 crore retail
digital payment transactions worth INR 51 lakh
crore were processed in January 2023. However,
as surprising as it may seem, the
Currency-in-Circulation (CiC) is also on a steady
rise depicting a unique co-existence of cash
digital payments in the country. So let us
understand what exactly currency-in-circulation
is and how it impacts the overall payment
ecosystem An important component of every
countrys money supply, currency-in-circulation
is the value of the currency or cash, including
banknotes or coins, issued by the countrys
monetary authority in Indian context, the RBI.
It is the currency that is tangibly used for
day-to-day transactions between the public,
businesses and vice-versa. Increase over the
years The Honble Finance Minister, Ms. Nirmala
Sitharaman recently said that the currency-in-circ
ulation has increased to Rs 31.33 lakh crore in
March 2022, from Rs 13 lakh crore in 2014. The
ratio of currency-in-circulation to GDP ratio
stood at 13.7 as on March 25, 2022, up from
11.6 per cent as on March 2014. Globally, the
level of currency-in-circulation is considered
to be an indicator of increased economic activity
and GDP. This is because when people have more
cash in hand, they are more likely to spend it,
which can stimulate demand for goods and
services. More recently, the data released by
the Reserve Bank of India (RBI) reveals that
currency-in-circulation as on March 17, 2023
stood at 33.72 lakh crore. Possible reasons for
this increase Many renowned economists state
that the rise in currency-in-circulation is
primarily due to Indias economic growth.
Additionally, according to a research report,
rising inflation and distress in Indias
informal sector could also be a contributing
factor to the rising currency-in-circulation. Fur
ther, factors such as increased cash withdrawals
on ATMs, especially in rural India, result in
increased currency-in-circulation. This is
primarily due to the disbursement of various
beneficiary schemes through Jan Dhan accounts.
Even today, various mom-and-pop shop owners,
small vendors and merchants rely on cash payments
for their day-to-day transactions. These
merchants prefer cash payments as their supply
chain partners or vendors request payments in
cash.
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Additionally, cash continues to be the most
preferred mode of transaction festivals, as
evident from the increase in cash withdrawals
from ATMs, subsequently increasing
the currency-in-circulation. How does
Cash-in-Circulation impact ATM/CRM
deployment? The deployment of ATM/CRMs is often
influenced by the amount of currency-in-circulatio
n in a country. Historically, when there is a
higher demand for cash, banks choose to deploy
more ATM/CRMs in geographically-strategic
locations to meet the needs of their customers.
This helps improve access to cash and make it
more convenient for people to withdraw
money. Speaking of Cash Recycler Machines or
CRMs they accept cash deposits, store, and
dispense physical currency. CRMs can automate
the cash handling process, improve security, and
reduce the need for manual cash counting and
sorting they can be useful in a
high currency-in-circulation scenario. By
enabling more efficient and accurate management
of physical currency, CRMs can help optimise the
flow of currency-in-circulation. With an
increased deployment of these high-efficiency
machines, banks tend to outsource operations to
payment players such as AGS Transact Technologies
Limited who offer end-to-end management of
ATM/CRMs which includes site identification and
development, machine deployment, maintenance,
and cash management. Hence, it is plausible that
if the currency-in-circulation increases, there
will be a subsequent increase in the deployment
of ATM/CRMs to meet the cash needs of customers
and improve the overall efficiency of the cash
ecosystem. To summarise and conclude,
currency-in-circulation is an essential component
of the Indian economy, and it has various
important implications such as enabling the
underbanked to participate in economic
activities and ensuring seamless operations in
case of technological failures. While digital
payments are becoming increasingly popular, cash
will continue to play a significant role in
Indias economic landscape for the foreseeable
future.