Despite the increasing popularity of digital payment methods like UPI in India, cash withdrawals from ATMs have shown a significant increase, indicating the persistent demand for physical currency.
According to a report by cash logistics company CMS Infosystems, average monthly cash withdrawals from ATMs rose from Rs 1.35 crore in FY23 to Rs 1.43 crore in FY24, representing a notable 5.51% increase. This growth trend was observed across different regions, with metros leading the surge at 10.37%, followed by semi-urban and rural areas (SURU) at 3.94%, and semi-metros at 3.73%.
Karnataka emerged as the leader in absolute withdrawals per ATM, with an annual average withdrawal of Rs 1.83 crore, closely followed by Delhi and West Bengal. The key consumption hotspots for ATM withdrawals were identified in states like Delhi, Uttar Pradesh, Tamil Nadu, Karnataka, and West Bengal.
Interestingly, public sector banks have strategically distributed approximately 51% of their ATMs in SURU regions, while private sector banks have placed around 36% of their ATMs in similar areas to facilitate consumption spending.
However, the surge in cash withdrawals contrasts with the exponential growth of digital transactions, particularly through UPI. Finance Minister Nirmala Sitharaman announced that India witnessed approximately 131 billion UPI transactions worth Rs 200 lakh crore in FY24, a significant increase from the previous fiscal year.
PhonePe and Google Pay dominate the UPI market, commanding a combined market share of 86% by volume. Paytm Payments Bank, a significant player, faced regulatory issues from the Reserve Bank of India (RBI) but remains influential in the digital payments landscape.
Despite the rapid digitization of payments, cash remains a preferred mode of transaction for many individuals, reflecting its continued significance in the Indian economy.
