RBI Gets Government Approval to Issue ₹10 and ₹20 Polymer Banknotes for Field Trials

The Reserve Bank of India (RBI) got permission from the Indian Government to roll out 1 billion polymer notes each of ₹10 denomination and ₹20 denomination for field trials. Pankaj Chaudhary, Minister of State for Finance, made the announcement during the parliamentary proceedings. This move is a very important step towards evaluating the authenticity of a more durable form of currency in India. In case the field trials prove to be successful, the RBI has planned to run the polymer notes for public circulation. However, the government has clarified that polymer notes will be in circulation along with paper notes and that they are not going anywhere and will not replace paper-based currency.

India’s Government Approves RBI’s Proposal of Polymer Banknotes

Polymer currency notes were proposed by the Reserve Bank of India (RBI) and was suggested by its Central Board to authorize and approve implementation of poly-fabric currency notes per the provisions of Section 25 of the Reserve Bank of India Act, of 1934.

The following has been approved by the Government at this point,

• 1 billion new ₹10 notes in polymer notes currency
• 1 billion new ₹20 notes in polymer notes currency

The currency notes will be used for specific trial purposes and secondly assist the RBI to evaluate their performance in different usage and climate conditions before introducing them officially.

What are Polymer Banknotes?

Polymer banknotes are notes made of a special plastic consumable rather than the conventional cotton-paper material used for manufacturing currency notes.

Moreover, polymer notes have even more advantages over notes made of paper due to the following features,

• A longer lifespan
• A higher resistance to moisture and dirt
• Better resistance to frequent handling
• Better security features which help prevent counterfeiting
• Lower replacing costs of polymer notes over the years due to their longer life

The benefits of polymer are the reasons why many central banks in different countries have started to issue polymer currency.

What Leads RBI to Bring in Polymer Currency Notes?

The Reserve Bank of India (RBI) has been studying polymer notes with the main goal of increasing the efficiency of the Indian Currency.

As stated by the Government,

• Research conducted by other countries has proved that the polymer currency last much longer than paper ones.
• This means that the frequency of replacement of the currency is lower.
• Higher durability is likely to mean less spending on printing and handling the currency.
• Polymer currency is much better when it comes to circulation in different conditions of weather.

The reasoning behind this decision is the rise of the demand for currency notes recently.

The Paper Currency Continue Along with Polymer Notes

The government has confirmed that it has no plans of eliminating paper currency completely.

In fact, as

• The two forms of banknotes will be used together.
• Trials in the field will assist in assessing the viability of polymer note production.
• Future expansions will be made based on the results of these tests.

This gradual process gives the RBI the chance to assess the practical side of the matter.

Will Polymer Notes have an Effect on Digital Payments?

The government does not believe that introducing polymer banknotes will adversely affect the use of digital payments.

As per the Ministry of Finance,

• The effect will only be observable after regular circulation begins.
• Cash and digital payment systems are complementary, and consumers will always choose the payment method that suits them best based on convenience and accessibility.
• Thus, the initiative aims to enhance cash currency rather than reduce the development of digital payments.

India’s Earlier Efforts to Implement Polymer Banknotes

India looked at polymer currency earlier in 2012.

In that year, the effort aimed for the following,

• To extend banknotes life span.
• To minimize printing and replacement expenses.
• To increase currency security.

However, the initiative was abandoned due to difficulties in implementation and technology.

The reappeared initiative is in light of technological achievements and continuous experience worldwide in the area of polymer currency.

World-Wide Acceptance of Polymer Banknotes

Polymers are already incorporated all over the globe as banknotes.

Below are some of the countries that are widely known to have polyester notes.

• Australia – the first country to introduce polymer in 1988.
• Canada – introduced polymer banknotes in 2011.
• Singapore
• Malaysia
• Indonesia
• Thailand
• Romania – the first European country to implement polymer banknote.

Today there are approximately 60 countries that support the use of polymer within their banking system.

Rising Costs of Currency Printing

The decision has taken place along with the increasing costs of printing currency notes.

According to the annual report of the Reserve Bank of India,

• 2024-25: ₹6,372.8 cores was spent on the secure printing of currency.
• 2023-24: ₹5,101.4 cores.

The credit for the increase goes to the augmented demand for printed currency notes.

The introduction of polymer notes that have a longer life span might help in reducing the frequency of replacement.