Despite efforts to shift to digital payments and usher in a digital payment economy, the currency in circulation has jumped by 17 per cent to Rs 21.10 lakh crore as of March 2019, the Reserve Bank said in its annual report for 2019.

The demand for the Rs 500 bill, which is the second highest denomination after the Rs 2,000 note, has soared the highest and now accounts for over 51 per cent of the value of currency in circulation, said the report released on Thursday.

'The value and volume of banknotes in circulation increased by 17 per cent and 6.2 per cent to Rs 21.10 lakh crore and 1,08,759 million pieces, respectively, in FY19,' the report said.

One of the objectives of the note ban of November 8, 2016, rendering as much as 86 per cent of the currency notes useless and had a crippling impact on the economy as a whole, was to encourage digital payments and bring down the use of cash.

But the public returned as much as 99.8 per cent of the cancelled notes into the system, leading many to question the rationale for the exercise itself.

The annual report noted a 59 per cent increase in retail electronic payment transactions to 23.3 billion.

The share of the Rs 500 bill stood at 42 per cent as of end June 2018, while the same for the Rs 2,000 notes, declined in value to Rs 6.58 lakh crore as of March 2019. However, the combined basis, the share of the high value Rs 500 and Rs 2,000 bills was almost stable at 82 per cent.

There was a sharp fall in the instance of fake currency detections in FY19 to 3.17 lakh pieces down from 5.22 lakh in FY18 and 7.62 lakh in FY17, the RBI said.