Govt Clears RBI's Proposal For Trial Of ₹10 And ₹20 Polymer Notes
The Centre approved the RBI's proposal to conduct field trials of one billion ₹10 and ₹20 polymer banknotes each while clarifying that paper currency would continue alongside the new notes
The Central Government approved the RBI's proposal to conduct field trials of ₹10 and ₹20 polymer banknotes, with regular issuance planned after successful testing
The Central Government has approved the Reserve Bank of India's (RBI) proposal to introduce polymer banknotes in the ₹10 and ₹20 denominations for field trials, marking the first step towards testing more durable currency notes in India.
In a written reply in the Lok Sabha on Monday, Minister of State for Finance Pankaj Chaudhary informed that the RBI had proposed the introduction of one billion pieces each of ₹10 and ₹20 polymer banknotes for field trials. He said the proposal has received the government's approval.
The Minister stated that the regular issuance of polymer banknotes in these denominations would commence only after the successful completion of the field trials.
According to the government, the proposal was recommended by the RBI's Central Board and forms part of the central bank's efforts to explore more durable alternatives to conventional paper currency.
Polymer notes to be more durable
Chaudhary informed Parliament that, as per the RBI and international studies, polymer banknotes have a significantly longer lifespan than paper currency. Their increased durability is expected to reduce wear and tear and lower replacement costs over time.
Polymer banknotes are already in circulation in several countries, including Australia, the United Kingdom and Canada, where they are considered more resistant to damage and counterfeiting than conventional paper notes.
No plan to replace paper currency
The Centre clarified that polymer notes will be introduced alongside existing paper banknotes and are not intended to replace paper currency altogether.
"The RBI has proposed issuing polymer banknotes along with paper substrate-based banknotes, and there is no proposal to replace paper currency with polymer substrate-based banknotes," the Minister said.
Impact on Digital Payments yet to be assessed
Responding to concerns about the possible impact on digital transactions, the government said the initiative remains at a preliminary stage.
Chaudhary noted that the effect of polymer banknotes on digital payments can only be assessed after their regular issuance following successful field trials. He added that cash and digital payment systems continue to function as complementary modes of payment available to the public.
The approval comes weeks after reports indicated that Bharatiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL), the RBI's currency printing arm, had initiated the process of procuring polymer substrate with advanced security features in preparation for the proposed field trials.