The government is exploring multiple ways to push more small-denomination currency notes into circulation, at a time when UPI is increasingly making digital payments ubiquitous in the world’s fourth largest economy.
The ideas include new automated teller machines, or ATMs, that can dispense ₹10, ₹20 and ₹50 currency notes and not just ₹100 and ₹500 notes, Mint reported on Tuesday (27 January 2026), citing people aware of the matter. Also under consideration are so-called Hybrid ATMs that can exchange large notes for small notes.
“A prototype of low-denomination currency dispensing machines is currently being tested under a pilot project in Mumbai,” one of the people cited above told Mint on the condition of anonymity. “Once approved, the system will be expected to be scaled up nationally”, with Hybrid ATMs at high-footfall public locations such as transport hubs, markets, hospitals and government offices.
The Reserve Bank of India may also be urged to print more small-denomination currency notes, the people said.
Currency in circulation in India
The initiative comes amid public frustration over lack of small notes for routine payments. Shopkeepers are often found struggling to provide change for a ₹500 note — the biggest note in circulation by volume and value.
The move is expected to benefit large sections of the population, particularly the informal economy and semi-urban areas that still rely on hard cash as UPI can be patchy in such locations. Also, not everyone has a smartphone.
“Also, in rural settings, especially in interior parts, traders will have small volume and value of transactions per day,” Devendra Pant, chief economist at India Ratings & Research, told Mint. “It is the government’s responsibility and priority to improve ease of living.”
What about the UPI overdrive then?
To be sure, in locations where UPI is patchy, Hybrid ATMs will fail as well.
“The machines (Hybrid ATMs) alone cannot solve the problem unless backed by adequate supply,” Mint quoted an unnamed bank executive as saying. “Printing, logistics, and recirculation of smaller notes will have to scaled up in parallel.”
Secondly, this plan flies in the face of the government’s digitisation agenda.
“This initiative should ideally be deployed at select locations only, as a large-scale rollout could prove uneconomical for banks,” Vivek Iyer, partner and financial services risk leader at Grant Thornton, told Mint.
“The right approach will be to apply these models where digital infrastructure is still evolving, so that currency availability is balanced with the maturity of digital payments.”
