Centre Approves RBI's Proposal For Trial Run Of ₹10, ₹20 Polymer Banknotes

India is set to begin trials for polymer banknotes as the government has approved the Reserve Bank of India’s (RBI) proposal to introduce one billion pieces each of ₹10 and ₹20 polymer currency notes.

The notes will initially be tested through field trials, and a wider rollout will depend on the outcome of these assessments.

The approval was confirmed by Minister of State for Finance Pankaj Chaudhary in a written response to questions raised in the Lok Sabha.

The move marks a significant step towards evaluating whether polymer-based currency can be adopted on a larger scale in India.

The RBI’s primary reason for considering polymer notes is their higher durability compared with traditional paper currency.

The central bank has cited international studies suggesting that polymer banknotes generally have a longer lifespan, making them potentially more cost-effective for countries where currency notes are used extensively.

However, the initial phase will focus on testing how polymer notes perform in Indian conditions, including factors such as climate, handling patterns and circulation challenges. The RBI will assess the results before taking any decision on expanding their use.

The introduction of polymer currency is also being viewed in the context of India’s rapidly growing digital payment ecosystem. However, the RBI has clarified that it is too early to determine whether polymer notes will have any impact on digital transactions. The central bank said such an assessment can only be made after the notes enter regular circulation.

The RBI has also emphasised that physical currency and digital payment systems serve different purposes and can continue to operate together. The introduction of polymer notes is not intended to replace digital payments or reduce the use of existing currency.

Importantly, the government has clarified that polymer banknotes will be introduced alongside existing paper-based currency. There is currently no proposal to completely phase out paper notes in favour of polymer-based alternatives.

If successful, the trials could pave the way for wider adoption of polymer currency in India, potentially improving the durability and efficiency of cash management while maintaining the coexistence of cash and digital payment systems.