New Delhi : India’s first plastic or polymer notes are expected to go into circulation at the start of the next financial year, RBI governor Sanjay Malhotra has said. The government has authorised the Reserve Bank of India to print up to 2 billion polymer banknotes – 1 billion each in the Rs 10 and Rs 20 denominations for field trials. At present, there is no proposal to replace paper currency entirely, and both polymer and paper notes will continue to circulate as legal tender.
According to Malhotra, polymer notes have two purposes. “One is that it enhances the durability. This is relevant especially for lower denomination notes where the velocity is higher, and so therefore the lifespan is lower,” he said. “These notes have been in circulation for more than 30 years in various countries, and one finds that the life is much more – two to four times the life of the paper substrate,” he added.
Calling the project a pilot, the RBI governor said, “We will test, check as to how they perform in the Indian conditions, climate, and other infrastructure that we have put in place. And it’s only after that we will see if we need to further scale it up as it is or with changes.” As part of the initiative, the RBI has issued a global tender through its currency-printing subsidiary, Bharatiya Reserve Bank Note Mudran Pvt Ltd (BRBNMPL), seeking suppliers for polymer substrate sheets embedded with advanced security features.
Reports indicate that since FY17, the RBI has removed 71 soiled notes from circulation for every 100 fresh notes issued. Counterfeit currency has also been increasing. Prospective suppliers will have to comply with stringent eligibility criteria, including obtaining government security clearance, adhering to restrictions related to China- and Pakistan-linked operations and raw materials, and demonstrating prior experience in supplying polymer banknote substrates to central banks.
Plastic notes have several advantages, including stronger security features, a lower risk of counterfeiting, reduced lifetime costs and a smaller carbon footprint. Globally, polymer notes have been known to have a much longer lifespan than conventional paper currency, with estimates suggesting they remain in circulation about 2.5 times longer.
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