SRINAGAR: The Union Government has approved a proposal from the Reserve Bank of India (RBI) to conduct field trials of one billion polymer banknotes each in the Rs 10 and Rs 20 denominations, while making it clear that there is no proposal to replace paper currency with polymer notes.
The information was provided by Minister of State for Finance Pankaj Chaudhary in a written reply to an unstarred question in the Lok Sabha.
According to the reply, the RBI, acting on the recommendation of its Central Board, had submitted a proposal to the Government under Section 25 of the Reserve Bank of India Act, 1934, seeking approval to introduce one billion pieces each of Rs 10 and Rs 20 polymer banknotes for field trials. The proposal also envisages regular issuance of these denominations after the successful completion of the trials. The Government has approved the proposal.
The Finance Ministry said the RBI has cited international studies indicating that polymer banknotes have a significantly longer lifespan than conventional paper currency, making them more durable.
On the possible impact of polymer notes on digital payments, the RBI said the initiative remains in a preliminary phase, and any assessment can be made only after the notes are issued regularly. It added that banknotes and digital payment systems are complementary modes of payment available to the public.
Responding to a separate query, the Government clarified that the RBI proposes to issue polymer banknotes alongside existing paper-based banknotes, and there is no plan to replace paper currency with polymer notes.
