Govt Clears RBI Pilot For Rs 10, Rs 20 Plastic Currency Notes

Govt Clears RBI Pilot For Rs 10, Rs 20 Plastic Currency NotesFinance Ministry approves RBI's proposal to issue one billion Rs 10 and Rs 20 polymer notes for field trials, with wider rollout contingent on the outcome.

The Government of India has taken the first step towards introducing polymer banknotes after the Finance Ministry approved the Reserve Bank of India's proposal to issue one billion pieces each of Rs 10 and Rs 20 polymer notes for field trials.

The approval was confirmed by Minister of State for Finance Pankaj Chaudhary in a written reply to questions in the Lok Sabha. The RBI has proposed introducing the polymer notes on a trial basis to evaluate their performance under Indian conditions. A wider rollout will be considered only if the field trials are successful, according to the government's response.

This development confirms an earlier NDTV Profit newsbreak, as the channel had reported that the RBI is set to begin a pilot rollout of polymer bank notes.

The central bank has argued that polymer banknotes are more durable than conventional paper currency. Citing international experience, the RBI said polymer notes have a longer lifespan, making them suitable for economies with high cash circulation.

The government, however, clarified that the move does not signal the end of paper currency. Polymer banknotes are proposed to circulate alongside existing paper notes, and there is no proposal to phase out paper-based banknotes in favour of polymer currency.

The RBI also said it is too early to assess whether polymer notes will have any impact on digital payments. Any such assessment can be made only after the notes are introduced into regular circulation, it told the government.

According to the RBI, physical currency and digital payment systems are complementary modes of payment and are expected to continue coexisting.

• "There is no proposal under consideration to replace paper substrate-based banknotes with polymer substrate-based banknotes," Minister of State for Finance Pankaj Chaudhary said in a written reply in the Lok Sabha.