RBI planning plastic currency notes? Pilot project likely soon in India as currency demand surges
Apart from printing costs, damaged and soiled notes have also become a major challenge for the central bank
RBI plastic currency: With the demand for cash continuously rising across the country, the Reserve Bank of India (RBI) has once again started considering the introduction of polymer (plastic) currency notes in India. According to media reports citing sources, the issue was discussed seriously during the RBI’s recent board meetings held in Patna and Mumbai.
The main reason behind reconsidering polymer notes is their longer life and higher durability compared to the current cotton-based paper currency notes. These notes are considered more resistant to wear and tear and are expected to reduce printing costs in the long run.
Sources said the central bank may soon announce a pilot project to test polymer banknotes. These notes are also expected to work smoothly through ATM machines without any major changes in the system.
The move comes at a time when the RBI is facing rising expenses on currency printing. According to the RBI’s annual report for the financial year 2024-25, the cost of printing banknotes increased from Rs 5,101.4 crore to Rs 6,372.8 crore. The sharp rise has mainly been driven by growing demand for fresh currency notes in the market.
Apart from printing costs, damaged and soiled notes have also become a major challenge for the central bank. During FY25, nearly 23.8 billion damaged notes were withdrawn from circulation, which was 12.3 per cent higher than the 21.24 billion notes removed in the previous year. Among all denominations, Rs 500 notes were found to be the most damaged, followed by Rs 100 notes.
Polymer banknotes are made using a special material called bi-axially oriented polypropylene (BOPP). These notes come with advanced security features and anti-counterfeiting technology, making them much harder to fake. They are also resistant to water, moisture, folding and bacteria.
Australia became the first country to introduce polymer currency in 1988 and completely shifted away from paper notes by 1996. Canada also adopted plastic banknotes in 2011, citing durability and environmental benefits.