Government approves plastic ₹10-₹20 notes, when will they be issued and what will be the benefits?

RBI Polymer Notes Field Trial: The Central Government told Parliament on Monday that the Finance Ministry has approved the Reserve Bank of India (RBI) proposal for field trials of polymer currency notes of Rs 10 and Rs 20 denominations. This information was given by Minister of State for Finance Pankaj Chaudhary through a written reply in the Lok Sabha.

The government, however, clarified that this decision does not mean banning paper notes. Polymer notes will remain in circulation along with existing paper notes and there is currently no proposal under consideration to completely replace paper-based bank notes with polymer notes.

One billion polymer notes will be issued

According to the government, RBI will issue one billion (1 billion) polymer notes each of Rs 10 and Rs 20 denominations as part of a field trial. These notes will be launched in the market on a trial basis so that their performance in Indian conditions can be assessed. If the trial is successful, then only their release on a wide scale will be considered.

RBI says that polymer notes are more durable than traditional paper notes. Based on international experience, the Central Bank believes that they have a longer lifespan, which may make them a better option for cash-rich countries.

Why are polymer notes needed?

RBI also pointed out that lower denomination notes get spoiled quickly, due to which they have to be printed and destroyed again and again. Polymer notes can reduce this problem and also reduce the cost of printing and replacement of notes in the long run. Additionally, polymer notes feature transparent &8216;see-through&8217; Advanced security features like windows and special security threads can be incorporated, which will help in curbing counterfeit notes.

Regarding the possible impact on digital payments, RBI said that it is too early to draw any conclusions in this regard. It can be assessed only after polymer notes come into regular circulation.

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The central bank believes that both cash currency and digital payments complement each other and both mediums will continue to work together in the future. Minister of State for Finance Pankaj Choudhary reiterated in his written reply in the Lok Sabha that at present the government has no proposal to completely replace paper-based bank notes with polymer notes.

-with agency input