RBI may revive polymer banknotes and is expected to announce a pilot project for public use, according to a report.
Higher printing costs and longer durability of plastic notes are said to be key factors behind the move.
Currency demand has surged to a record ₹42.86 trillion, while the volume of soiled banknotes being withdrawn continues to rise.
RBI May Revive Plastic Currency in India After 12 Years
The Reserve Bank of India is reportedly considering the reintroduction of polymer banknotes as rising currency demand and increasing printing costs put pressure on the country's cash management system
The Indian Rupee
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The Reserve Bank of India (RBI) is likely to revive the printing of polymer banknotes for circulation, according to a report by Business Standard. The move comes amid rising demand for currency notes and increasing costs associated with printing and replacing paper currency.
Citing multiple sources, the report said discussions on reintroducing polymer banknotes were held during the last two meetings of the RBI's central board.
The decision is understood to have been driven by the lower lifecycle cost and longer durability of polymer notes compared with conventional paper currency. The central bank is expected to announce a pilot project involving polymer banknotes for public use in the near future.
India has never fully introduced polymer banknotes into circulation. The RBI had previously conducted a field trial of ₹10 polymer notes in 2013, but the initiative was eventually shelved due to technical and operational challenges.
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What Are the Advantages of Plastic Notes?
According to the report, polymer notes offer a clear advantage in terms of longevity and replacement costs.
The RBI spent ₹6,372.8 crore on printing banknotes in FY25, compared with ₹5,101.4 crore in FY24. The increase was largely attributed to a higher indent for printing currency notes, the report said, citing the RBI's FY25 annual report.
The growing volume of damaged and soiled notes has also emerged as a key concern.
Data showed that 23.8 billion pieces of soiled banknotes were withdrawn and disposed of in FY25, an increase of 12.3% from 21.24 billion pieces in the previous year. Polymer notes typically last longer than paper notes and are more resistant to wear and tear, reducing the frequency of replacement.
Demand for currency has also remained strong. Currency in circulation rose 11.5% year-on-year to a record ₹42.86 trillion as of May 15. Between April and May alone, currency in circulation increased by ₹1.15 trillion.
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The RBI has made efforts to encourage greater use of coins, but adoption has remained below expectations.
More than 60 countries currently use polymer banknotes. Australia was the first country to introduce them, while other economies using polymer currency include Canada, Singapore, Malaysia, Thailand, Indonesia and Romania.
If implemented, the move would mark one of the biggest changes to India's currency management system in over a decade.