NEW DELHI: The Reserve Bank of India (RBI) will conduct field trials of 100 crore polymer banknotes each in the Rs 10 and Rs 20 denominations, amounting to a total value of Rs 3,000 crore.
In a written reply, Minister of State for Finance Pankaj Chaudhary said the RBI had submitted a proposal to the government following recommendations from its Central Board, seeking approval for field trials and the eventual regular issuance of polymer banknotes in the two denominations, subject to the successful completion of the pilot exercise. The proposal has since been approved by the Centre.
The minister clarified that polymer banknotes will be introduced alongside existing paper currency and are not intended to replace conventional banknotes.
“According to the RBI, the polymer banknotes are proposed to be issued along with paper banknotes and there is no proposal to replace paper currency with polymer substrate-based banknotes,” Chaudhary said. The statement marks the first official confirmation that the RBI’s field trials will focus on the Rs 10 and Rs 20 denominations.
The announcement follows a global tender floated on July 17 by the Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a wholly owned subsidiary of the RBI, for the procurement of 3.4 crore polymer sheets to print banknotes in two denominations.
According to the tender document, the procurement is meant to meet an “immediate requirement”, with plans to source larger quantities of polymer substrate across multiple denominations if the field trials prove successful.
Although Rs 10 and Rs 20 notes account for nearly one-fourth of the total currency in circulation by volume, they represent only about 1.3% of the total value of banknotes in circulation.
This is the RBI’s second attempt to introduce polymer currency. In 2009, the central bank had proposed field trials of Rs 10 polymer notes across Kochi, Mysuru, Shimla, Jaipur and Bhubaneswar to assess their performance under different climatic conditions.
However, the initiative did not progress due to what the RBI described as “certain technical infirmities”. Polymer banknotes, first introduced by Australia in 1988, are now used in more than 50 countries and are generally considered more durable than paper currency.
Citing inputs from the RBI, Chaudhary said international studies indicate that polymer banknotes have a significantly longer lifespan than paper notes. He added that the impact of polymer currency on digital payments can only be assessed after regular issuance. The minister also noted that physical currency and digital payment systems are complementary modes of payment available to the public.
Source: The Financial Express
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