Guwahati: The Centre has approved the Reserve Bank of India’s (RBI) proposal to introduce polymer banknotes in the Rs 10 and Rs 20 denominations on a trial basis, marking a fresh step towards testing more durable currency in the country.
Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha on Monday that the government has authorised the RBI to issue 1 billion polymer banknotes each of Rs 10 and Rs 20 for field trials. The move follows a recommendation from the RBI’s Central Board under Section 25 of the Reserve Bank of India Act, 1934.
According to the minister, if the field trials are successful, the central bank will proceed with the regular issuance of polymer banknotes in these two denominations.
However, the government clarified that polymer notes are not intended to replace existing paper currency. Instead, they will circulate alongside conventional paper-substrate banknotes.
“The proposal has been approved by the government,” Chaudhary said in a written reply, adding that there is currently no plan to phase out paper currency.
The RBI has been examining the feasibility of polymer banknotes to improve the lifespan of frequently used currency notes. RBI Governor Sanjay Malhotra had earlier confirmed that the central bank was assessing the advantages and challenges associated with polymer notes before taking a final decision.
The central bank’s latest annual report highlighted rising currency printing costs, with expenditure on securely printing banknotes increasing to Rs 6,372.8 crore in 2024-25, up from Rs 5,101.4 crore in the previous financial year. The increase was attributed to higher demand for printed banknotes.
Citing international experience, Chaudhary noted that polymer banknotes generally last much longer than paper notes, making them a potentially cost-effective alternative over time despite higher production costs.
The minister also said it is too early to assess whether polymer notes would have any impact on digital payments, as the initiative is still in its initial phase. He emphasised that cash and digital payment systems complement each other and will continue to coexist.
India had previously explored the introduction of polymer currency in 2012, but the proposal was eventually shelved due to technological and implementation challenges.
Globally, around 60 countries have adopted polymer banknotes. Australia pioneered the technology in 1988 with its $10 note, while countries including Canada, Singapore, Malaysia, Indonesia, Thailand and Romania have also transitioned to polymer currency in varying degrees.