The Reserve Bank of India (RBI) is moving forward with plans to introduce polymer-based ₹10 and ₹20 banknotes, with a target for them to enter circulation by the start of the next financial year, April 2027. This announcement was made by RBI Governor Sanjay Malhotra following a recent Monetary Policy Committee (MPC) meeting.
Why Polymer Banknotes?
The central bank's decision to explore polymer currency stems from the need to improve the durability of lower-denomination notes. Unlike higher-value notes, ₹10 and ₹20 banknotes are exchanged frequently in daily transactions, leading to a significantly shorter lifespan for their current cotton-based paper counterparts.
Governor Malhotra emphasized that polymer notes offer enhanced durability and a longer life, making them particularly suitable for denominations with high circulation velocity. These plastic-based notes are more resistant to moisture, dirt, and general wear and tear compared to traditional paper currency, which is expected to reduce the need for frequent replacement.
Government Approves Field Trials
The initiative to introduce polymer notes, a proposal first mooted over a decade ago, gained renewed momentum with government approval for field trials. The RBI is authorized to print one billion ₹10 notes and one billion ₹20 notes on polymer substrates for this pilot phase.
These trials are crucial to assess how the polymer banknotes perform under India's diverse climatic conditions and the rigors of heavy circulation. Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), an RBI subsidiary, has already initiated tenders for the necessary polymer substrates.
Long-Term Benefits and Global Context
While polymer notes have a higher upfront production cost than paper notes, the RBI anticipates that their extended lifespan will lead to substantial long-term savings. Reduced frequency of printing, transportation, and destruction of worn-out notes is expected to lower overall currency management expenses.
Globally, over 60 countries, including Australia (the pioneer in 1988), the United Kingdom, Canada, and New Zealand, have already adopted polymer banknotes due to their durability, lower lifecycle costs, and improved resistance to damage. During the trial phase, the new India polymer currency will coexist with existing paper notes. A wider rollout of polymer ₹10 and ₹20 notes is contingent on the successful completion of these field tests.