Prime Minister Narendra Modi seems to have achieved some success in turning India into a digital economy, especially after his decision to demonetise old Rs 500 and Rs 1,000 notes late last year.
A new report says Indians withdrew Rs 32,500 crore between March 17-24, which was way less as compared to the peak of Rs 52,800 crore which was withdrawn for the week ended January 13.
According to SBI research report Ecowrap, even in the span of one week (between March 17 to 24), cash withdrawal declined by Rs 2,000 crore.
The Reserve Bank had removed caps on withdrawal limits in many phases. All withdrawal limits were removed from March 13.
The report said that the drop in cash withdrawal was particularly "intriguing" considering the removal of all withdrawal limits.
Even though the report did not cite any specific reason for the drop in cash withdrawal, the government's strict monitoring on cash withdrawal and perks on digital payment were considered to be the key factors.
"While it may be difficult to ascribe a reason, our estimates indicate that there would be a permanent liquidity injection of least Rs 1.7 lakh crore or 1.1 per cent of GDP post demonetisation," the report said, adding that this data are a reflection of the extent of formalisation of the economy.
In fact, the cash withdrawal is likely to go down even further with the government banning cash transactions of over Rs 2 lakh from April 1.
This declining trend in cash withdrawal will also have repercussions on RBI liquidity management policy, the report added.