India to roll out plastic currency notes: Why is RBI switching to polymer banknotes?
· OpIndia
India could soon see plastic currency notes in everyday use, as the Reserve Bank of India (RBI) is planning to introduce polymer banknotes on a trial basis, with the first ₹10 and ₹20 notes likely to enter circulation at the beginning of the next financial year if ongoing field tests are successful.
RBI Governor Sanjay Malhotra shared the update during the media briefing after the Monetary Policy Committee (MPC) meeting on 5th August 2026. He said the central bank is moving ahead with field trials and is aiming to introduce the notes at the start of the next financial year, provided everything goes according to plan.
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Why is the RBI introducing plastic currency?
According to Malhotra, the main reason is durability. Lower-value notes such as ₹10 and ₹20 change hands much more often than higher denominations. As a result, they wear out faster and have to be replaced frequently.
Polymer notes are expected to last much longer than the cotton-based paper notes currently used in India. International experience shows that they can remain in circulation two to four times longer, making them more suitable for notes that are used regularly.
The RBI governor also said the move will help increase India’s currency printing capacity as the economy continues to grow and the demand for cash rises.
Modi government approves RBI proposal to print plastic currency notes
The Modi government has approved the RBI’s proposal to print one billion polymer ₹10 notes and one billion polymer ₹20 notes for field trials. These notes will be tested under Indian weather conditions and in the country’s existing cash-handling system.
The RBI has clarified that this is only a pilot project. A decision on wider circulation will be taken only after studying the performance of the notes during the trial phase.
The government has made it clear that there is no plan to replace all paper currency with polymer notes. If the trial is successful, polymer ₹10 and ₹20 notes will circulate alongside the existing paper notes. Both will remain valid legal tender.
Polymer currency notes and their benefits
Although they are often called “plastic notes”, polymer banknotes are not made from ordinary plastic. They are printed on a specially designed polymer substrate that is much stronger than conventional cotton-based paper.
Unlike paper notes, polymer currency absorbs much less moisture, dirt and sweat. This helps the notes stay cleaner and remain usable for a longer period.
The biggest advantage is a longer lifespan. Since polymer notes last much longer, fewer replacement notes need to be printed, transported and distributed. While they cost more to manufacture initially, the overall cost of managing currency comes down over time.
Another major benefit is security. Polymer notes can include advanced anti-counterfeiting features such as transparent windows, colour-changing designs, detailed microprinting and complex security elements that are much harder to copy.
The RBI has also pointed to environmental benefits. As fewer notes need to be printed and transported, the overall carbon footprint of currency production can be reduced.
Drawbacks of plastic currency
Polymer or plastic currency notes also come with a few challenges. They are more expensive to produce at the beginning, may feel slightly slippery compared to paper currency and can lose their shape if exposed to very high temperatures for long periods. Recycling them also requires specialised facilities.
However, many central banks that have adopted polymer notes believe these disadvantages are outweighed by the longer life and lower replacement costs.
Why is the RBI testing them first?
Calling it a pilot project, Malhotra said the RBI wants to see how polymer or plastic currency notes perform in India’s climate and day-to-day conditions before taking a final decision.
The central bank will study how the notes handle heat, humidity and regular public use. It will also assess whether any changes are needed before expanding the programme.
How is the RBI preparing for the rollout?
To support the trial, the RBI’s printing arm, Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), has issued a global tender seeking suppliers for polymer substrate sheets with advanced security features.
Companies bidding for the project must meet strict eligibility conditions, including government security clearance, restrictions related to China- and Pakistan-linked operations and raw materials, and previous experience in supplying polymer banknote material to central banks.
Why is the shift being considered now?
India has withdrawn nearly ₹50 trillion worth of soiled currency over the past decade. Reports also indicate that since FY17, around 71 damaged notes have been removed from circulation for every 100 fresh notes issued.
Annual spending on currency security features is estimated to be around ₹5,000 crore. At the same time, counterfeit currency continues to remain a concern.
The RBI believes longer-lasting and more secure polymer notes could help reduce replacement costs while making fake notes more difficult to produce.
In a written reply in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the RBI has informed the government that international studies show polymer banknotes have a significantly longer lifespan than paper notes.
He also said the project is still at a preliminary stage, and its impact on digital payments can be assessed only after regular issuance begins. The minister reiterated that polymer notes are proposed to be introduced along with paper notes, not as a replacement.
Many countries use polymer notes
More than 60 countries have already adopted polymer currency, including Australia, the United Kingdom, Canada, New Zealand, Singapore, Malaysia, Thailand, Vietnam, Romania, Mexico and Nigeria.
Australia became the first country to introduce polymer banknotes in 1988. Since then, many central banks have switched to the technology because of its durability, lower replacement costs and better protection against counterfeiting.
Studies from countries such as the UK and Canada show that polymer notes remain in circulation much longer than paper notes. The Bank of England has also reported a significant decline in counterfeiting after switching to polymer currency.
For now, the focus remains on field testing. If the polymer ₹10 and ₹20 notes perform well in Indian conditions, the RBI is expected to move ahead with their regular issuance from the beginning of the next financial year.
The move marks a major step in modernising India’s physical currency while ensuring that cash remains cleaner, more durable and more secure for millions of people who continue to rely on it every day.