NEW DELHI, Jul 28: The Centre has approved the Reserve Bank of India‘s (RBI) proposal to conduct nationwide field trials of ₹10 and ₹20 polymer banknotes, while making it clear that there is no plan to replace existing paper currency.
The approval was disclosed by Minister of State for Finance Pankaj Chaudhary in a written reply in the Lok Sabha on Monday. Under the pilot project, the RBI will issue one billion polymer notes each in the ₹10 and ₹20 denominations to assess their performance under India’s climatic and circulation conditions before any decision on wider adoption.
The government emphasised that the field trials should not be interpreted as the beginning of a transition from paper currency. Instead, polymer notes are being tested as an additional option, with paper and polymer banknotes expected to coexist if the trials are successful.
According to the RBI, polymer banknotes are more durable than conventional paper notes, allowing them to remain in circulation longer. The central bank said this could significantly reduce the costs associated with printing, transporting and replacing frequently used lower-denomination notes such as ₹10 and ₹20, while also reducing waste.
The RBI also noted that polymer notes offer stronger protection against counterfeiting by incorporating advanced security features, including transparent see-through windows and specialised security threads, making them more difficult to forge.
Responding to concerns about the impact on digital payments, the RBI said it was too early to assess any effect, adding that physical cash and digital payment systems complement each other and are expected to continue playing important roles in India’s payment ecosystem.
“There is no proposal under consideration to replace paper substrate-based banknotes with polymer substrate-based banknotes,” Chaudhary reiterated, describing the exercise as a field trial to evaluate the feasibility and performance of polymer currency under Indian conditions. (Agencies)
