The RBI may soon print Polymer Bank notes instead of Paper Bank notes. The idea of printing polymer banknotes has come to light to meet the surge in demand for currency notes in the last few years.
According to sources and media reports, the issue of introducing polymer or plastic notes was discussed in the last two board meeting of the central bank, held in Patna and Mumbai.
Printing polymer Bank notes provides several advantages such as reduced cost of production and the higher shelf life of such currency notes. A pilot project involving plastic banknotes for public use is expected to be announced soon.
But a big issue will come in case of ATMs. ATMs would have to be enabled to dispense polymer-based notes.
The expenditure incurred on securely printing paper currency notes during 2024-25 (FY25) was ₹6,372.8 crore as against ₹5,101.4 crore during the previous year.
Discussions were also held for increasing the shelf life of bank notes due to increasing number of soiled notes. Data shows 23.8 billion pieces of soiled banknotes were disposed in FY25, rising 12.3 per cent from 21.24 billion pieces in the previous year. Most soiled notes were of the ₹500 denomination, followed by ₹100 banknotes.
Currency in circulation (CiC) continued to grow strongly and reached a record high of ₹42.86 trillion as of May 15, rising 11.5% compared to a year ago. During the first one-and-a-half months of FY27, the amount of cash in circulation increased by ₹1.15 trillion.
This shows that people are still using a large amount of cash even as digital payments continue to grow. Sources said that demand for lower denomination banknotes such as ₹10 and ₹20 has remained high in recent years. However, these notes make up only a small share of the total currency in circulation.
In terms of value, ₹10 notes accounted for only 0.7% of total banknotes in circulation over the last two years, while ₹20 notes accounted for just 0.8%.
The supply of total number of coins increased from about 1.2 billion in FY24 to 1.5 billion in FY25, of which the ₹5 denomination coin constituted 800 million, followed by 400 million ₹20 coins.
In 2012, the then government had decided to introduce one billion pieces of Rs. 10 banknotes on polymer substrate on a field trial basis in five cities. The project was, however shelved due to technological challenges.
Around 60 countries in the world have introduced polymer banknotes so far. Australia was the first one to introduce polymer banknotes, starting with a ten dollar note in 1988, followed by Singapore, Indonesia, Thailand, Malaysia. Romania was the first European country to use a plastic note back in 1998, while Canada introduced similar notes in 2011. US dollar notes are made of a specialised cotton-linen blend material.
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