CHENNAI: The Reserve Bank of India (RBI) is considering the introduction of polymer banknotes, reviving a proposal first discussed more than a decade ago.
According to media reports, the move comes amid rising currency printing costs, growing volumes of soiled notes being withdrawn from circulation, and continued demand for cash despite the rapid expansion of digital payments.
A pilot project is expected to be announced, with lower denomination notes like Rs 10 and Rs 20 to be tested first.
1. Polymer notes are made of plastic, not paper - Polymer banknotes are printed on a thin, flexible plastic substrate instead of the cotton-based paper used in conventional currency notes.
2. They are not rigid like cards - Despite being called “plastic notes”, they are lightweight, foldable and can be handled much like existing paper currency.
3. They last longer than paper notes - Polymer notes are more resistant to dirt, water damage, moisture and tearing, allowing them to remain in circulation for a significantly longer period.
4. Environment friendly - Polymer notes generally tend to remain cleaner and can withstand harsh environmental conditions, making it recyclable.
5. They offer stronger security features - Polymer banknotes can incorporate features such as see-through windows, micro-optic holograms and specialised inks, making them harder to counterfeit.
6. RBI is looking at them to reduce replacement costs - Since polymer notes last longer, central banks generally spend less on replacing damaged currency over time.
7. Printing currency has become more expensive - RBI’s expenditure on printing currency notes rose to Rs 6,372.8 crore in FY25 from Rs 5,101.4 crore in the previous year, largely due to higher demand for banknotes.
8. India has tried polymer notes before - In 2012, the government approved a field trial of one billion Rs 10 polymer notes in Kochi, Mysore, Jaipur, Bhubaneswar and Shimla. The initiative was later shelved because of technological and operational challenges.
9. More than 60 countries already use them - Countries including Canada, the United Kingdom, Singapore, Malaysia, Thailand, Indonesia, Romania, New Zealand and Vietnam have since followed.
10. Polymer notes are expensive - They are more expensive to produce initially, but their longer lifespan can reduce replacement costs over time.