The Cost of Cash in India

January 20, 2015

Despite progress made, India continues to be a cash-intensive economy:

  • Fewer than 35% of Indians above the age of 15 have used a bank account and less than 10% have ever used any kind of non-cash payment instrument. In fact, the percentage of India’s population that has accounts with formal financial institutions (35%) is significantly lower than that of Kenya (42%), Brazil (55%), and China (63%)
  • India’s cash intensity also stands out in contrast to other developing countries. The value of notes and coins in circulation as a percentage of GDP in India is 12.04%, compared to 3.93% in Brazil, 5.32% in Mexico, and 3.72% in South Africa.

The payments business in India is on the cusp of a revolution. With rapid growth and modernization of the economy, there is no doubt that a majority of India’s 1.2 billion plus citizens will demand and get modern financial services far superior to what their parents’ generation enjoyed. It is simply a matter of when the supply side catches up. The Cost of Cash India report is the product of a research effort that analyzed the most pertinent policy documents, reports, scholarship, expert interviews, and payments data. It is part of a larger global study by The Fletcher School at Tufts University’s Institute for Business in the Global Context (IBGC) that seeks to ascertain the private costs and risks of cash management facing diverse stakeholders in society: consumers, business, government, and financial systems. The Cost of Cash India report also includes insight into how households pay differently for access to cash – according to their place in society, determined by income, employment, age, and place of residence; and their widely differing views on the risks of cash and strategies for risk management.

The report does not forecast the likelihood that cash will fall into disuse, or drop below any threshold in payment market share. It is different from much of the academic work in payment economics, which focuses explicitly on social costs with a view toward informing debates around payment clearing and settlement. Instead, it is analyzed through the private costs to households and businesses that arise from their use of cash, beginning when cash is received and ending when it is spent again. The estimates are based on original IBGC surveys, coauthors’ surveys and interviews, and a broad mix of academic studies and official statistics.”

Read the Full Report: The Cost of Cash in India


  • Rama Bijapurkar
  • Benjamin D. Mazzotta
  • Bhaskar Chakravorti
  • Dr. Rajesh Shukla

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