A new billionaire in India’s top 50⁠ and 10 new startups that have demonetisation to thank


  • On the anniversary of demonetization, Business Insider takes a look at how digital payments benefitted from the note ban.
  • According to a RBI report, the number of digital transactions is going to go from 20.6 billion in December 2018 to 87 billion in December 2021.
  • Payment companies like Paytm, MobiKwik continue to be leaders of digital payment transactions.
  • However, currency circulation is back at a 5-year high.
Three years ago, Prime Minister Narendra Modi in an evening address shocked the nation by banning ₹500 and ₹1000 currency notes. The move crippled the economy, threw businesses into confusion, the effects of which are being felt even today.

But there is one billionaire, Paytm founder Vijay Shekhar Sharma, and his peers including 19 new digital payments startups clearly gained from the note ban.

And Sharma knew the potential of this decision the moment it was announced. The day after demonetisation, Paytm released a front page advertisement in most Indian newspapers, thanking the Prime Minister for the note ban while the rest of the country cribbed and clamoured for cash. At the same time, according to reports, Paytm saw a 200% increase in downloads on the night of demonetisation.

In August 2016, Paytm was valued at $5 billion, which went up to $6 billion in the next year. Today, the company is set to hit $16 billion valuation, according to reports.

Paytm had 140 million users in October 2016, and today has over 350 million users. In the Hurun India Rich List 2019, Paytm founder Vijay Shekhar Sharma is the only startup founder to be in the top 50 of the list. Sharma has a net wealth of ₹20,400 crores.

And he is not alone. Since 2016, there are over 19 funded startups that have come up in the digital payments sector with 10 of them coming up after demonetisation. The sector since 2016, has seen great investor investment over $641.6 million in funding, according to Tracxn (the number excludes startups founded before 2012 like Paytm, Mobikwik etc.)

According to a Reserve Bank of India report, the number of digital transactions is expected to increase more than four times from 20.6 billion in December 2018 to 87.07 billion in December 2021.

“The payment system transactions in 2017 grew by 44.8% over the previous year (over a strong year-on-year growth of 56.4% in 2016) even after cash availability normalised after demonetisation showing that non-cash payments were slowly becoming a habit for the users. This is also demonstrated by the growth of 54.3% in the financial year 2018-19 over the previous financial year,” said a Reserve Bank of India report.

The government-owned Unified Payments Interface (UPI) has crossed 800 million users already and its transaction volume has grown from just 285,000 in November 2016 to 1.15 billion in October 2019.


The use of cards and electronic wallets among people has definitely increased but its link with demonetisation is not clear.

Data showed that electronic payments in retail transactions decline in the year of demonetisation and the one after that⁠— may be due to fall in consumption due to the cash crunch and confusion caused by the note ban. It’s only in financial year 2019, that electronic payments showed a sharp increase.


Cash is coming back

However, while digital payment continues to be on the rise, cash too is creeping back into the market with big numbers.


However, according to experts the number is still low compared to India’s GDP.

“Economic growth has been possible through many transactions – that are done primarily in cash. This demand for cash has led to a large growth in the Currency in Circulation (CIC). CIC grows with GDP, and inflation. Even after demonetization, CIC has come back up rapidly – though not to the same level as would be predicted by GDP growth rate and inflation,” said the Nandan Nilekani report on digital payments in India.

See Also:
Upgrade post demonetisation, downgrade post tax cuts⁠— Moody's mood swings expose the economist’s inertia
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