The Reserve Bank of India reported that currency in circulation eased 0.1% on the fortnightly basis to stand at ₹42.85 lakh crore as on August 31, 2026. According to reports from Business Standard, this represents a significant increase compared to the same period last year, indicating continued growth in cash circulation despite the recent fortnightly decline.
The currency in circulation jumped 12.3% on a year ago basis compared to 8.8% rise at the same time last year, as reported by Business Standard. This substantial acceleration in growth rate demonstrates the continued expansion of cash circulation in the Indian economy, with the current fiscal year showing a 2.9% increase in currency circulation so far.
The overall reserve money expanded by 0.7% in the same period to ₹52.76 lakh crore, according to the RBI data reported by Business Standard. In the current fiscal year, currency in circulation has edged up 2.9% while reserve money has gained 3.3%, indicating a measured but steady growth trajectory in the monetary system.
The RBI's FCNR(B) deposit scheme has significantly impacted currency circulation dynamics, with Indian banks mobilising more than $127 billion through these deposits against an initial target of about $50 billion. As reported by Reuters, the scheme has provided banks with a relatively cheap source of foreign-currency funding while adding substantially to India's foreign-exchange reserves. The RBI subsequently closed the window for fresh FCNR(B) deposits on August 31, 2026, with the deposits typically having three-to-five-year maturities.
Under the FCNR(B) arrangement, the RBI bears the cost of hedging foreign-exchange exposure on principal amounts through its special swap facility, while banks manage currency risk on interest payments independently. According to Reuters, banks have left much of their future interest-payment exposure unhedged due to cost considerations, creating potential currency volatility risks. The RBI has recouped $31.2 billion of foreign-currency assets by August 7, 2026, equivalent to 55% of the amount mobilised at that point, while SBI Research estimates the RBI could potentially earn around 4.5-5% on these foreign reserves.
