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New Delhi: You may feel it a lot differently with your next ten or 500 rupee note. In a move that will impact how Indian currency functions for years to come, the Reserve Bank of India (RBI) is ready to introduce plastic or polymer banknotes in the country.
In recent years, there is a high demand for currency notes, so RBI had revived the concept of printing polymer banknotes. This is not a new concept as the proposal had been discussed in the RBI’s recent Patna and Mumbai board meetings and a pilot release of polymer notes with public circulation is likely to be announced soon.
Why did RBI do this switch?
Both cost and wear are very simple problems. The expenditure on paper currency printing in 2024-25 is at ₹6,372.8 crore as compared to ₹5,101.4 crore during 2023-24, primarily due to the requirement to print more paper currency notes. This is an increase of more than ₹12,000 crore in just a year. This cost can be made much lower over the years by the use of plastic notes, which last a lot longer.
The second is no less serious a problem. In FY25, around 23.8 billion banknotes were ripped or otherwise damaged – up from 21.24 billion in FY24 and disposed of. The majority of these notes were ₹500 notes, followed by ₹100 notes. To put it simply, India is wasting a lot of aged notes each and every day.
Overall, polymer notes will likely serve as a more durable material compared to paper notes, and could help to extend the life of paper banknotes and to reduce the costs of managing paper banknotes over time, in addition to the beneficial effect on the environment.
This has been attempted earlier in India. The then government had planned to put one billion ₹ 10 banknotes on a polymer basis into circulation under trial for five cities in 2012. What was intended was to prolong the life of notes, not stamp out counterfeiting. Accordingly, the project was abandoned because of technological hurdles.
This time it looks like it is going to be better. A multitude of these earlier questions have been resolved by the development of new technologies over the last decade, which enable a new attempt to be more feasible and cost-effective to realize. Officials also announced that now, ATMs can dispense polymer-based notes.
Is it possible for India to match the best in the world?
Here, the big question is, can India get to the levels of durability that other countries have just reached with their plastic notes if they undertake this transition? Yes, and a strong global argument to justify it. There are about 60 countries in the world that have introduced polymer banknotes so far. First Australia in 1988 (with a $10 note), after that Singapore (1989), Indonesia (1990), Thailand (1990), and Malaysia (1991). The plastic note was introduced in Romania in 1998 and in Canada in 2011.
The polymer notes of Australia last four to five times longer than ordinary paper notes, and are manufactured by a company called Securency (now called CCL Secure). Switching to polymer in 2011, Canada saw a dramatic decline in soiled notes and printing costs savings. Polymer notes have also been commended by other countries for being more difficult to counterfeit, water-resistant, and cleaner, such as the UK, New Zealand, and Singapore.
Taking into account the hot, humid climate of India, the extreme monsoon season, and the size of its rural population that handles cash, it is likely that India would benefit more from plastic notes than many other European countries. Paper is extensively destroyed in Indian conditions within months of being torn, wet, and dirty, of the paper note. Polymer notes are much better equipped to deal with it all.
With the technology available in India, the existing ATMs that can be upgraded and experiences gained from countries where polymer notes have been launched, Indian polymer notes should be able to hold their own, if not improve, on global durability levels.
What’s Next?
If sanctioned, the pilot project would be the first substantial step towards plastic money in India and may soon lead to the introduction of plastic banknotes in various denominations. To the layman, it equals notes that do not fall out of wallets, last longer without getting dirty and do not have to be changed as frequently. India’s plastic money revolution could just be about to begin.
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