&imwidth=800&imheight=600&format=webp&quality=medium "WION Decodes | Why is India switching to plastic notes? RBI plans to introduce polymer currency")
The Reserve Bank of India (RBI) is exploring the introduction of polymer currency notes, reviving a proposal first considered nearly a decade ago as the central bank looks for a more durable and secure alternative to traditional paper banknotes.
RBI Governor Sanjay Malhotra said on Friday that the proposal is still at a preliminary stage. If implemented, the move could gradually replace paper notes with polymer-based currency, commonly referred to as plastic notes.
Why is RBI considering polymer notes?
One of the main reasons behind the proposal is the short lifespan of paper currency in India. Frequent handling and varying climatic conditions often cause notes to wear out quickly.
According to RBI data, nearly two lakh damaged currency notes are withdrawn and destroyed every year. Higher-denomination notes such as Rs 100 and Rs 500 account for a significant portion of the damaged currency removed from circulation.
The expenditure on printing currency notes rose to ₹6,372.8 crore in FY25 from ₹5,101.4 crore in the previous year, largely due to increased demand for banknotes, as per the RBI’s annual report.
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Polymer notes are considerably more durable than paper notes. Studies conducted in countries that use polymer currency suggest that such notes can remain in circulation at least twice as long as conventional paper notes. Their longer lifespan could help reduce printing and replacement costs over time.
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The RBI is also considering polymer notes because of their advanced security features. Polymer banknotes can incorporate transparent windows, holograms, colour-shifting elements and other security measures that are more difficult to replicate than those used in paper currency.
Counterfeit currency remains a challenge for central banks around the world. RBI data has shown a rise in the detection of fake high-denomination notes in recent years, particularly Rs 500 notes.
Several countries that have adopted polymer currency have reported lower levels of successful counterfeiting. Australia, which completed its transition to polymer notes by the mid-1990s, says its latest banknotes include multiple security features designed to make forgery extremely difficult.
