CMS Info Systems Limited (CMS), a business services company offering banking logistics and technology services, released the ‘CMS India Cash Vibrancy Report 2023’. The industry report on consumer cash usage, underpinned by the company’s proprietary CMS Cash Index (CCI), highlights the megatrends through the period FY 2023 compared to FY 2022.
The report looks at the relative performance of the CCI, launched in 2016 to track the infusion of cash back into the economy across various commerce points, a weighted index constructed based on cash that goes into circulation via the ATM channels, and the cash collected from retail channel points. CMS Info Systems cover both—versus the S&P Global India Composite PMI (S&PGIPMI)—that gauges the expansion and contraction in economic activity. The S&PGIPMI demonstrates a strong correlation and establishes the CMS Cash Index as a key barometer for tracking the cash vibrancy in the country.
CMS has drawn on key data points to showcase the annual growth in pan-India ATM cash replenishments in FY 2023, carried out by the company in metropolitan cities versus semi-urban and rural (SURU). The analysis in the report illustrates the strong demand for cash-based transactions in India - from ATM cash withdrawal patterns across metropolitan, semi-metropolitan, semi-urban, and rural centers to sector-level analysis of business activity through retail cash management data.
Anush Raghavan, president of cash management services at CMS Info Systems, said, “It is critical to widen financial inclusion and provide a convenient and low-cost payment system accessible to everyone. We have seen 10.1 per cent growth in monthly average cash replenishment at ATMs and a strong 1.3X increase in average cash collection per point with e-commerce companies in FY23.”
According to the report, at $421 billion in 2021, India saw the third-highest annual growth of 7.9 per cent in CIC, while UK at around 11.8 per cent and China 10.2 per cent respectively saw the highest and second-highest annual increase over 2020.
After touching 8.7 per cent in 2016, India’s CIC to GDP ratio has averaged close to 12.4 per cent, which is higher than the 10-year average of 11.8 per cent. The pan-India ATM cash replenishments by CMS Info Systems witnessed an annual growth of 16.6 per cent in FY 2023.
The ATM cash withdrawal of Rs 2.84 lakh crore in March 2023 is an absolute growth of 235.0 per cent in 76 months after demonetisation. Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Uttar Pradesh accounted for 43.1 per cent of the total ATM cash replenished by CMS Info Systems across the country in FY 2023.
India also witnessed the maximum cash usage and demand during the festive and wedding seasons between October to December in FY 2022 and during October, December and March of FY 2023. Data of average cash collected from Retail Cash Management (RCM) points split within the six key industry sectors reveal a 50:50 performance. Sectors within transportation, organised retail and banking and financial services (BFSI) sectors saw an annual increase of 38.7 per cent, 14.4 per cent and 5.6 per cent each during FY 2023.
“It is noteworthy that a significant portion of the population in India is unbanked, with no access to formal banking services. These individuals rely on cash usage every day as their primary means of conducting transactions. Under penetration of financial and digital literacy further leads to security concerns for digital payments despite the convenience offered. The correct balance of cash and digital will lead a booming economy like ours to an upward trajectory, is our belief,” Raghavan added.