The Reserve Bank of India is once again planning to introduce polymer or plastic currency notes in India.
The proposal was discussed during the RBI board meetings held recently in Patna and Mumbai, Business Standard reported.
The move comes as demand for currency notes continues to increase despite the rapid growth of digital payments across the country.
The RBI is expected to soon announce a pilot project involving the public use of polymer banknotes.
Plastic Notes May Reduce Costs
Officials believe polymer banknotes offer several advantages over traditional paper currency.
Plastic notes have a longer shelf life and lower production costs compared to paper-based notes currently used in India.
The RBI spent ₹6,372.8 crore on printing currency notes during FY25, higher than ₹5,101.4 crore in the previous year.
The increase was mainly due to rising demand for currency printing.
Officials also said ATM technology has improved significantly over the years and machines can now identify and dispense polymer-based notes more efficiently.
Soiled Notes Continue To Rise
One of the key reasons behind the proposal is the growing number of damaged and soiled notes in circulation.
Data showed that 23.8 billion pieces of soiled banknotes were disposed of during FY25, up 12.3 percent from 21.24 billion pieces in the previous year.
Most damaged notes belonged to the ₹500 denomination, followed by ₹100 notes.
Experts believe polymer notes can remain usable for a much longer period, reducing replacement costs and improving durability.
Cash Demand Remains Strong In India
India’s currency in circulation continued to grow strongly during the year.
Currency in circulation rose 11.5 percent year-on-year to reach a record ₹42.86 trillion as of May 15.
During the first one-and-a-half months of FY27 alone, currency circulation increased by ₹1.15 trillion.
The RBI also noted strong demand for lower denomination notes like ₹10 and ₹20, although their share in total circulation remains small.
The central bank had also increased coin supply, but the use of coins has not grown as expected among consumers.
