The Reserve Bank of India is reviving its long-discussed plan to introduce polymer banknotes, beginning with a pilot project that will test ₹10 and ₹20 notes.

These notes are expected to last longer, reduce replacement costs, and incorporate stronger anti-counterfeiting features, addressing the rising demand for cash despite digital payment growth.

The Reserve Bank of India has decided to move forward with a pilot programme for polymer banknotes, a project that has been under consideration for more than a decade. The central bank’s board meetings in Patna and Mumbai recently revisited the issue, concluding that the advantages of polymer notes outweigh those of traditional cotton-based paper currency.

The pilot will begin with lower denominations such as ₹10 and ₹20, which face the highest wear and tear due to their heavy circulation.

The primary motivation behind this initiative is durability. Polymer notes, made from bi-axially oriented polypropylene (BOPP), are significantly more resistant to moisture, folding, and microbial damage compared to paper notes.

This resilience translates into a longer shelf life, reducing the frequency of replacement and disposal. In FY25 alone, India disposed of 23.8 billion pieces of soiled banknotes, a 12.3 per cent increase from the previous year. Most of these were ₹500 and ₹100 notes, but lower denominations also suffer rapid deterioration due to constant handling.

Cost efficiency is another major factor. The RBI’s expenditure on printing currency rose sharply to ₹6,372.8 crore in FY25, up from ₹5,101.4 crore in FY24. By extending the lifespan of notes, polymer currency can reduce the overall printing burden and associated costs. Automated teller machines (ATMs) are expected to be adapted to dispense polymer notes, ensuring smooth integration into the existing banking infrastructure.

Security enhancements are equally important. Polymer notes allow for advanced anti-counterfeiting features such as metameric inks, transparent windows, and complex holographic elements that are difficult to replicate.

This is particularly relevant in India, where counterfeit currency remains a persistent challenge. The adoption of polymer notes is expected to strengthen public confidence in the integrity of the currency system.

Globally, polymer banknotes have proven successful. Australia pioneered their use in 1988 and fully transitioned by 1996. Countries such as Canada, the United Kingdom, New Zealand, Vietnam, Romania, and the Maldives have since adopted polymer currency, citing both durability and environmental benefits.

Canada’s transition in 2011 followed environmental assessments that showed polymer notes performed better across multiple lifecycle stages compared to paper notes. Cotton-based paper notes require extensive water, pesticides, and chemicals, contributing to environmental degradation, whereas polymer notes are more efficient over their lifespan.

India’s currency in circulation continues to rise, reaching a record ₹42.86 trillion as of May 15, 2026, despite the rapid adoption of digital payments. This underscores the enduring reliance on physical cash, making innovations in banknote durability and security essential.

The pilot project will serve as a crucial testbed, and if successful, could pave the way for a phased rollout across higher denominations.

The RBI’s move reflects a balance between tradition and modernisation. While India has embraced digital payment systems, cash remains indispensable for millions, particularly in rural and semi-urban areas. Polymer notes represent a pragmatic step towards ensuring that physical currency remains cost-effective, secure, and environmentally sustainable.

Agencies