The Centre has approved the Reserve Bank of India’s (RBI) proposal to conduct field trials of polymer banknotes in the Rs 10 and Rs 20 denominations, months after RBI Governor Sanjay Malhotra indicated that the central bank was considering introducing plastic currency notes in a phased manner.
The Finance Ministry informed Parliament on Monday that, based on the recommendation of its Central Board, the RBI has proposed issuing one billion polymer banknotes each in the Rs 10 and Rs 20 denominations for field trials. If the pilot is successful, these denominations could be issued regularly in polymer form.
The move revives a proposal first considered in 2014, when the government planned to test one billion Rs 10 polymer notes across five cities—Kochi, Mysore, Jaipur, Shimla and Bhubaneswar. However, the trial was shelved before implementation.
According to the RBI, polymer banknotes have a significantly longer lifespan than conventional paper currency. They are more resistant to dirt, moisture and tearing, making them more durable in circulation. Polymer notes also incorporate enhanced security features, making them more difficult to counterfeit.
Despite the approval for field trials, the government has no plans to replace paper currency entirely. Polymer Rs 10 and Rs 20 notes, if introduced, will circulate alongside existing paper banknotes.
Speaking in June, RBI Governor Sanjay Malhotra had said the proposal to introduce polymer currency notes was still at an early stage and would be implemented gradually if approved. Polymer notes are made from a thin plastic substrate instead of cotton-based paper. They retain the flexibility of traditional banknotes while offering greater durability and improved protection against counterfeiting.
The proposal comes at a time when cash demand remains strong despite the rapid adoption of digital payments. Currency in circulation grew by 11.5% over the past year to a record Rs 42.86 trillion as of May 15, with lower-denomination notes such as Rs 10, Rs 20 and Rs 50 continuing to see high demand.
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