Kolkata: Polymer banknotes, which resemble plastic, may soon be issued for circulation on trial basis in India. The central government has approved a proposal from the Reserve Bank of India (RBI) to issue 10 crore polymer banknotes in denominations of Rs 10 and Rs 20 for field trials. This is considered the first major step towards introducing polymer banknotes in India. MoS Finance Pankaj Chaudhary has stated in a written reply to the Lok Sabha that RBI will initially issue these notes on a limited scale, the primary objective of which is to test their durability and usability under India’s varied climate and usage conditions. Once the trial is found to be successful will they be considered for mass issuance.
On July 17, Bharatiya Reserve Bank Note Mudran Private Limited, which is a 100% subsidiary of the RBI floated a global tender for 3.4 crore polymer sheets to print banknotes in two denominations. It was mentioned in the tender that there was “immediate requirement”. It also said that if the field trials were successful, it would “go for procurement of larger quantity of substrate across different denominations”.
Significantly, this is not the government’s first attempt to introduce plastic currency. In September 2009, RBI invited bids for supply of 100 crore plastic notes of Rs 10 denomination. The field trials were conducted in Kochi, Mysuru, Shimla, Jaipur and Bhubaneswar. However, the trials didn’t pass for ATMs at that times were reportedly found to be unable to handle plastic notes.
RBI thinks that polymer notes are stronger and longer-lasting than ordinary paper notes. Soiled notes present a constant headache for the central bank, which prints a lot of money every year to replace old and soiled notes which are unfit for use. Plastic or polymer notes will be less prone to wear and tear and less susceptible to water and dirt. Polymer notes are already in use in many countries around the world, and their lifespan has been found to be longer than traditional notes. Therefore, these can solve a big problem both for the central bank as well as for the public.
The government has dismissed any concerns about discontinuing paper notes. The MoS Finance has clearly stated that there is no proposal to discontinue paper currency at this time. Polymer notes will continue to circulate alongside existing paper currency. This means that people will not need to exchange their existing paper currency.
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Avijit Ghosal has been writing on topics of business, industry and investment for the past three decades. He also writes on the broad economy, infrastructure and issues in banking. He has worked for economic dailies such as the Business Standard, The Economic Times, business magazines such as Business Today, English broadsheet the Hindustan Times and Bengali daily Anandabazar Patrika before joining TV9 Network.