India to get its first plastic notes next year: RBI governor shares timeline, explains benefits

India’s first plastic or polymer notes are expected to go into circulation at the start of the next financial year, RBI governor Sanjay Malhotra has said. Sharing an update on the pilot project at the post monetary policy press conference, Sanjay Malhotra said that the project is at a pilot stage and decision to expand it will depend on the results of the testing.

The government has authorised the Reserve Bank of India to print up to 2 billion polymer banknotes – 1 billion each in the Rs 10 and Rs 20 denominations for field trials. At present, there is no proposal to replace paper currency entirely, and both polymer and paper notes will continue to circulate as legal tender.

“If everything goes as per plan, we are targeting that they (polymer notes) be in circulation at the beginning of the next financial year,” Sanjay Malhotra said.

According to Malhotra, polymer notes have two purposes. “One is that it enhances the durability. This is relevant especially for lower denomination notes where the velocity is higher, and so therefore the lifespan is lower,” he said.

“These notes have been in circulation for more than 30 years in various countries, and one finds that the life is much more – two to four times the life of the paper substrate,” he added.

“The second purpose is that it expands our capacity as the needs of the economy increase. It is with these purposes that we have brought in,” Malhotra explained.

Calling the project a pilot, the RBI governor said, “We will test, check as to how they perform in the Indian conditions, climate, and other infrastructure that we have put in place. And it’s only after that we will see if we need to further scale it up as it is or with changes.”