Introduction of Polymer Banknotes by the Reserve Bank of India
The Reserve Bank of India (RBI) is considering the introduction of polymer banknotes to address the growing demand for currency notes. This initiative has been discussed in recent RBI board meetings in Patna and Mumbai.
Advantages of Polymer Banknotes
- Cost-Effectiveness: Polymer notes are more cost-effective to produce compared to paper notes.
- Increased Shelf Life: They offer a longer shelf life, reducing the need for frequent replacements.
- Disposal of Soiled Notes: The need to dispose of soiled banknotes is a significant consideration, with 23.8 billion soiled notes disposed of in FY25.
Current Currency Statistics
- Production Costs: The RBI spent ₹6,372.8 crore on paper currency printing in FY25, an increase from ₹5,101.4 crore in the previous year.
- Currency in Circulation (CiC): As of May 15, CiC rose by 11.5% year-on-year to ₹42.86 trillion.
- Denomination Demand: High demand for lower denomination notes like ₹10 and ₹20, although they constitute a small share in circulation.
Historical Context and International Experience
- Previous Attempts: In 2012, a plan to introduce polymer notes was shelved due to technological challenges.
- Technological Advances: Recent developments have addressed these challenges, allowing for ATM compatibility with polymer notes.
- Global Adoption: Over 60 countries have adopted polymer banknotes, with Australia being the first in 1988.
Conclusion
The RBI's move towards polymer banknotes aligns with global trends and aims to improve the efficiency and durability of currency in circulation, leveraging technological advancements to overcome past challenges.
