Currency in circulation

Indian Economy glossary

Also called: CiC · Topic: Banking, Credit Creation and Monetary Policy · NCERT: Class 12, Ch 3 "Money and Banking"

Meaning

Currency in circulation is the total of notes and coins that are outstanding, meaning issued and not yet returned. It has two parts:

Currency in circulation = currency with the public + cash with banks

It is the largest part of high-powered money (M0), which is the base on which banks create credit:

M0 = currency in circulation + bankers' deposits with RBI + other deposits with RBI

Example

In 2024-25, currency in circulation was ₹37,24,448 crore (about ₹37.24 lakh crore). M0 was about ₹48.3 lakh crore, so currency in circulation made up most of it.

Don't confuse with

  • Currency with the public: this counts only notes and coins that people and firms hold. It leaves out the cash kept in banks' vaults. It is currency with the public, not currency in circulation, that enters M1.

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