New Delhi: Cash usage by people of the country went up by around 10% over the last two years starting from October 2016, a study conducted by CMS Info Systems, India’s largest cash management company, said. Cash usage recorded on the CMS cash index was as low as 46 in December 2016, which went up to 117 in October 2018.

CMS Cash Index is a weighted index consisting of three factors, namely, cash in circulation, cash handled in the CMS ATM channel and cash handled in the CMS RCM (retail cash management) channel. CMS has a network spanning thousands of ATMs and retail outlets and managing over 50% of the total cash in circulation in India.

The study is based on data collected from across 2,300 locations in India covering 98% districts and 11,090 pin codes.

“Ensuring robust cash circulation is an important component for financial inclusion as well as the overall economy. Cash is back as a primary mode of payment across geographical, socio-economic and sectoral divides," according to Anush Raghavan, vice-president, CMS Info Systems Limited.

The study shows that most retail payments sectors such as e-commerce and utility bill payments, which are typically driven by digital payments, are also largely dominated by cash.

“E-commerce was at 115% in October 2016 and after a 67% dip during demonetisation, it peaked by 732% at 308 in May 2018. E-commerce is driven by cash on delivery (COD) and these cash collections trends are testimony to the same," according to the study.

While cash usage in the top 20 metro cities slightly decreased during this period, cash usage in semi-urban and rural areas went up substantially." For semi-urban and rural areas, cash requirement per ATM was 85-88% against the metros. Now the gap has bridged and in most months of 2017-18, an ATM in semi-urban and rural city consumed as much cash as an ATM in a metro city," the study added.

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States such as Haryana and West Bengal recorded high cash usage just before demonetisation at around 115% and 135%, respectively, Raghavan said. “It dropped by 82% and 57% during demonetisation. It picked up and eventually bounced back to pre-demon levels to 124 and 135 respectively in April 18 for high cash-usage regions."

Also read: How demonetisation impacted the Indian economy

According to Raghavan, there has also been a rise in the amount of cash dispensed from formal channels after demonetisation, but ATMs have still not been completely re-calibrated to dispense new currency of smaller denominations such as 200.

With digital payments crossing new records every month, the study shows that India has a long way to go in predominantly becoming cashless.

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