January 6: Circulation of bank notes is decreasing in the market due to the public attraction towards digital payment and the government's encouragement for electronic payment systems. 

The number of users of electronic payment devices and transactions is increasing. Similarly, Nepal Rastra Bank's data shows that the use of physical cash is falling in the market. 

According to NRB, by the end of Mangisr 2079, notes worth Rs 616 billion were in circulation in the market. During the same period last year, notes worth of Rs 654 billion were in circulation. This shows that circulation of physical cash has declined by Rs 38 billion in one year. 

The statistics at the NRB show that notes worth Rs 671 billion were in circulation on average per month in the first five months of 2078/79, while in the first five months of the current fiscal year, notes worth Rs 617 billion were in circulation on average per month.

The fifth month of the current fiscal year saw the drop in the circulation of notes by Rs 15 billion compared to the fourth month. In the fourth month of the current fiscal, notes worth Rs 631 billion were in circulation in the market. 

The number of notes in circulation has decreased every month, except the month of Ashoj due to festivals such as Dashain and Tihar in the current fiscal year, according to the financial statements published by the central bank.

NRB sends new notes to the market at Dashain every year. Since people spend more during the festival, circulation of the notes is more as well. The NRB issued notes worth Rs 16 billion to the market at this year’s Dashain. Apart from it, the market saw an increase of bank notes worth Rs 35 billion.

With the celebration of festivals over, the notes in circulation had started to return to the banking system from Kartik. Circulation of notes has dropped by Rs 33 billion in the fourth and fifth months of the current fiscal. 

According to the NRB, among the notes of different denominations in circulation in the market, note of Rs 5 denomination is the highest in in the number. By the end of last fiscal year, notes worth Rs 670 million of 5 denomination were in the market.

In terms of monetary value, notes of Rs 1000 denomination beat other notes in circulation. 
Notes worth Rs 443 billion of one thousand denominations are in the market. Similarly, the notes worth Rs 260 million of Rs 500 denominations are in circulation.

Guru Prasad Poudel, Executive Director at Payment System Department of Nepal Rastra Bank  said number of notes in circulation is shrinking with rise of digital payment system.

“However, number of notes in circulation is still high in the market,”, Poudel shared. 
To encourage electronic payment system, the NRB has made it mandatory to use a cheque for the transaction of the amount above Rs 10 million. The central bank has also increased limit for electronic transactions. 

Real time gross settlement (RTGS), ATMs,  electronic cheque clearing, IPS, Connect IPS, Debit/Credit cards, internet banking, wallet, QR code, e-commerce, among other electronic mediums and devices,  are being used for digital transaction in Nepal.