In what is likely to be a significant change in the way in which currency notes are made and circulated in India, RBI Governor Sanjay Malhotra said on
Wednesday that the central bank is targeting polymer banknotes to be in circulation at the beginning of the next financial year, provided ongoing trials and preparations proceed as planned. Plastic currency notes in India could enter circulation at the beginning of the next financial year if ongoing field trials go as planned, Reserve Bank of India (RBI) Governor Sanjay Malhotra stated. Speaking at the post-Monetary Policy Committee (MPC) briefing, Malhotra said the RBI is targeting the rollout of polymer banknotes "at the beginning of next FY" after completing field trials. "We are targeting that they are in circulation, as per plan, in the beginning of next FY," Malhotra said. Experts believe the proposed shift from traditional paper-based notes to polymer currency will make banknotes more durable and resistant to moisture. The shift will also reduce the frequency of replacing damaged notes and boost currency management efficiency, however challenges around printing, distribution and ATM compatibility need to be addressed. The proposed shift will represent a major development in India's currency-management system. Polymer notes have been used in several countries because of their durability and longer circulation life, and Malhotra said such notes have lasted for more than 30 years in some jurisdictions. He also indicated that polymer notes could be particularly useful for lower-denomination notes, which typically have a higher velocity of circulation. Experts believe this move could help reduce the frequency of replacing damaged notes and potentially lower currency-management costs over time. However, the transition would also require careful planning around printing, distribution, ATM compatibility and public awareness. The success of the ongoing field trials will be crucial in determining how and when polymer currency can be introduced.
