The Reserve Bank of India’s proposal to issue one billion pieces of Rs 10 and Rs 20 polymer notes apiece for field experiments was authorized by the Finance Ministry, marking the first step towards the introduction of polymer banknotes by the Indian government.
In a written response to inquiries in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary verified the consent. Under order to assess the polymer notes’ performance in Indian settings, the RBI has suggested introducing them on a trial basis. According to the people’s reaction, a larger rollout will only be taken into consideration if the field testing are successful.
According to the central bank, polymer banknotes are more resilient than traditional paper money. The RBI stated that polymer notes have a longer lifespan and are therefore appropriate for economies with substantial cash circulation, citing worldwide experience.
However, the government made it clear that this does not mean that paper money will no longer be used. There is no plan to gradually replace paper-based banknotes with polymer currency; instead, polymer banknotes are intended to circulate alongside current paper notes.
Additionally, the RBI stated that it is too soon to determine whether polymer notes will affect digital payments in any way. It informed the government that no such evaluation could be made until the notes were put into regular circulation.
The RBI claims that digital payment systems and physical cash are complimentary forms of payment that will likely coexist in the future.
“There is no proposal under consideration to replace paper substrate-based banknotes with polymer substrate-based banknotes,” stated Pankaj Chaudhary, the State Minister for Finance, in a written response to the Lok Sabha.
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