New notes will circulate alongside existing paper currency; no plan to replace conventional banknotes
New Delhi : The Central Government has approved the Reserve Bank of India’s (RBI) proposal to introduce one billion polymer banknotes each in the ₹10 and ₹20 denominations for field trials, Finance Minister Nirmala Sitharaman informed the Rajya Sabha on Tuesday.
The proposal was submitted by the RBI following a recommendation from its Central Board under Section 25 of the Reserve Bank of India Act, 1934.
Under the proposal, the RBI will conduct field trials involving one billion ₹10 polymer notes and one billion ₹20 polymer notes. If the trials are successful, the central bank may proceed with regular issuance of polymer notes in these denominations.
Polymer Notes to Circulate Alongside Paper Currency
Sitharaman clarified that the proposed polymer banknotes are not intended to replace existing paper-based currency.
“The proposal has been approved by the government. As per the RBI, these polymer banknotes are proposed to be issued along with paper substrate-based banknotes,” Sitharaman said in a written reply.
This means that if the trials lead to wider issuance, polymer and conventional paper banknotes will circulate simultaneously.
The same position was reiterated earlier in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary.
Procurement Process Still at Initial Stage
The RBI has indicated that the procurement process is currently at an initial stage.
Consequently, the government has not yet specified an exact date for the introduction of the polymer notes or the total expenditure involved in the project.
The RBI will assess the performance of the notes under Indian climatic and usage conditions before taking any decision on wider circulation.
Why Polymer Banknotes?
Polymer banknotes are produced using a plastic substrate, generally biaxially oriented polypropylene (BOPP), instead of conventional cotton-based paper.
One of their major advantages is greater durability. Polymer notes can withstand moisture, dirt and repeated handling better than traditional paper currency and are generally expected to remain usable for longer periods.
This could be particularly relevant for lower-denomination notes such as ₹10 and ₹20, which typically change hands frequently and can wear out relatively quickly.
Countries including Australia, Canada and the United Kingdom already use polymer banknotes in circulation.
India Has Tested Polymer Currency Before
India has previously explored the use of polymer currency, including a limited experiment around 2012.
The current proposal, however, represents a more formal move towards evaluating polymer banknotes through large-scale field trials.
The RBI’s currency printing subsidiary, Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), has already floated a global Expression of Interest (EoI) for polymer substrate, with the procurement process currently underway.
Possible Circulation from FY28
RBI Governor Sanjay Malhotra has indicated that, subject to successful field trials and operational assessments, polymer banknotes could potentially enter circulation around the beginning of FY28.
However, the central bank has emphasised that the project remains at the pilot stage and that any decision regarding wider issuance will depend on the results of the trials and performance data.
Paper Currency and Digital Payments to Coexist
The government has also indicated that physical banknotes and digital payments are complementary, rather than mutually exclusive.
Any impact that polymer currency may have on the adoption of digital payments can only be assessed after the notes enter regular circulation, the government has said.
For now, the approval marks an important step towards testing whether more durable polymer banknotes can improve the lifespan and efficiency of India’s currency system while continuing to operate alongside existing paper-based notes.
