The Reserve Bank of India (RBI) has said notwithstanding "growing digitisation of the economy", Indians continue to love dealing in cash, making it one of the most cash-intensive economies in the world.

Clearly, Prime Minister Narendra Modi's "Digital India" is skipping the country, as far as the monetary transactions are concerned.

So, the next time you transact in cash, please keep in mind the following statistics:

  • A single transaction at an ATM costs Rs 18-20, meaning if one draws a Rs 100 note in one transaction at an ATM, the underlying cost works out to be Rs 20, or 20% of the nominal value of the currency note.
  • The median lifespan of a note across all denominations is about 3.6 years. So, about a third of the current currency stock of 8,360 crore pieces gets replaced every year at an average cost of Rs 1.7 per note.
  • Last financial year, the RBI spent Rs 3,860 crore to print 2,300 crore notes across all denominations.
  • India's cash-to-GDP ratio was close to 12% in 2013, five times that of Sweden, and roughly 2.5-3 times of other emerging economies such as Brazil (2.7%), and South Africa (3.3%).

Referring to a report by the Institute for Business in the Global Context, the RBI has said 87% of all transactions in 2012 in India were in cash and less than 10% of people have ever used any kind of non-cash payment instrument.

But the apex bank is not all that pessimistic.

Encouraged by the burgeoning e-commerce market, which is poised to grow from $3 billion in 2013 to $100 billion by 2020 according to a Morgan Stanley 2015 document, the RBI takes comfort in hopes that a shift towards online shopping would bring down cash transactions. With over 35 crore Internet users in India (as of June 2015), of which 20 crore were first-time users, according to the Internet and Mobile Association of India), the "love for cash", as the bank prefers to call it, will hopefully decline.

The observations form part of the report of the Committee on Medium-term Path on Financial Inclusion (CMPFI), released by the RBI on 28 December, 2015. The bank has invited comments from the public to the recommendations by the CMPFI by 29 January, 2016.

The report can be read here.