Plastic Notes in India: Months after the Reserve Bank of India Governor Sanjay Malhotra hinted at considerations over bringing plastic notes in circulation, the government has approved proposal to conduct field trials of polymer notes.
The government has approved field trials of polymer banknotes in the Rs 10 and Rs 20 denominations, the Finance Ministry informed the parliament on Monday, July 27, as per CNBC TV 18 report.
With the recommendation of its Central Board, the RBI has proposed issuing one billion pieces each of Rs 10 and Rs 20 polymer banknotes for field trials. The proposal also includes regular issuance of polymer banknotes in these two denominations after successful completion of the trials.
Long Lifespan of Polymer Banknotes
The appeal to using polymer banknotes in circulation has come years after the government had planned to start polymer note trials in 2014. However, the plan couldn't be executed at that time.
At that time, the government had planned a trial of one billion Rs 10 notes. The trial was supposed to be held in five different cities, including Kochi, Mysore, Jaipur, Shimla and Bhubaneshwar. However, the plastic currency note trial was stopped back then.
According to the RBI, polymer currency notes have a significantly longer lifespan than paper banknotes. The talks of introduction of plastic notes is at a nascent stage.
Will Polymer Notes Replace Paper Currency?
No, they will not. As of now, the government is not planning to completely replace the paper currency notes with polymer notes. Polymer notes with Rs 10 and Rs 20 denominations will be introduced alongside the paper currency.
RBI Governor Sanjay Malhotra Hints At Polymer Currency Note Trials
Earlier in June, the RBI Governor Sanjay Malhotra had told reportes that the Central Bank is considering a proposal to introduce polymer currency notes in a phased manner. The proposal to bring plastic currency notes in circulation is at a very initial stage, said RBI Governor Sanjay Malhotra on June 5, as per an Indian Express report.
What Are Polymer Notes?
Polymer notes use a thin plastic material. They are not made of cotton paper. They are very flexible like paper money. These notes resist dirt, moisture, and tearing. They last much longer than paper cash. They also feature stronger anti-counterfeiting elements.
Rising Popularity of Cash Notes
While a huge section of Indian population has now shifted completely to digital transactions, demand for currency notes has increased for lower denomination notes like Rs 20 and Rs 50. Currency in circulation rose 11.5 per cent last year. It reached a record Rs 42.86 trillion. This figure was recorded on May 15. Demand for small notes like Rs 10 remains high.
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