Reserve Bank of India Governor Sanjay Malhotra said Friday that the central bank is re-examining the proposal to introduce polymer banknotes in India [1, 2].
A shift to plastic currency would represent a significant change in the physical nature of the Indian economy. If implemented, the move could reduce the frequency of note replacement and lower the costs associated with printing paper currency.
Malhotra addressed the topic during a post-policy press conference held on Friday [2]. He said that the RBI is currently examining the pros and cons of polymer notes [2]. The primary benefits under consideration include increased durability, and water-resistance [2].
Polymer banknotes are made from a plastic film that is more resistant to wear and tear than traditional cotton-based paper. These notes typically last longer in circulation and are harder to counterfeit due to the integration of advanced security features within the plastic substrate.
While the governor confirmed the review is underway, he did not provide a specific timeline for a rollout. The RBI continues to evaluate how these materials perform in different environmental conditions across the country — a critical factor given India's diverse climate and high humidity in several regions.
The central bank's focus on durability aims to minimize the volume of soiled notes that must be withdrawn from circulation and destroyed. This process is a constant operational burden for the RBI and commercial banks throughout the country.
“The RBI is examining the pros and cons of polymer notes.”
The move toward polymer currency suggests the RBI is prioritizing long-term operational efficiency over the immediate costs of transitioning the currency supply. By reducing the rate at which notes degrade, the central bank can lower the overhead of printing and distributing new cash, while potentially improving the security and cleanliness of the physical money in circulation.
