RBI targets circulation of polymer currency notes by next financial year

Why in News?

Reserve Bank of India (RBI) Governor Sanjay Malhotra has announced that the RBI is targeting the circulation of polymer currency notes by the beginning of the next financial year. The announcement follows the Government’s approval for field trials of polymer banknotes in ₹10 and ₹20 denominations.

Key Highlights

• The Ministry of Finance has approved the RBI’s proposal to conduct field trials of polymer currency notes.
• The pilot project will involve the issuance of:
  • 1 billion ₹10 polymer notes
  • 1 billion ₹20 polymer notes
• The objective is to assess the durability, performance, and suitability of polymer notes under Indian climatic and usage conditions.
• The government has clarified that paper currency will not be replaced entirely. Polymer notes will circulate alongside existing paper banknotes.

What are Polymer Banknotes?

• Polymer banknotes are currency notes made from durable plastic film (biaxially oriented polypropylene – BOPP) instead of the traditional cotton-based paper.
• They are designed to have a longer lifespan, greater resistance to dirt and moisture, and enhanced security features.

Advantages of Polymer Notes

• Greater durability: Last significantly longer than paper notes, especially for lower denominations with high circulation.
• Lower replacement costs: Reduced wear and tear decreases the frequency of printing new notes.
• Improved security: Can incorporate advanced anti-counterfeiting features such as:
  • Transparent windows
  • Complex holographic elements
  • Enhanced security threads and micro-printing
• Resistance to moisture and dirt: Better suited to harsh weather conditions and frequent handling.
• Environmentally beneficial: Longer lifespan reduces the overall environmental impact of currency production.

Why are Polymer Notes Being Introduced?

• Lower denomination notes such as ₹10 and ₹20 experience high circulation velocity and wear out quickly.
• Polymer notes can improve the efficiency and cost-effectiveness of currency management by increasing the lifespan of these notes.
• They also strengthen the fight against counterfeit currency through advanced security technologies.

Global Adoption

• More than 60 countries have adopted polymer banknotes, including Australia, United Kingdom, Canada, Singapore, New Zealand, Vietnam, Malaysia.
• Australia became the first country to introduce polymer banknotes in 1988, primarily to improve durability and combat counterfeiting.

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