The Finance Ministry has cleared the Reserve Bank of India’s proposal to issue one billion polymer ₹10 and ₹20 notes each for field testing, while confirming that paper currency will continue to remain in circulation.
The Government of India has approved the Reserve Bank of India’s (RBI) proposal to begin field trials of polymer-based ₹10 and ₹20 banknotes, marking the country’s first major step toward testing plastic currency.
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The approval was confirmed by Minister of State for Finance Pankaj Chaudhary in a written reply in the Lok Sabha. Under the proposal, the RBI will issue one billion ₹10 notes and one billion ₹20 notes made from polymer for pilot testing across selected regions.
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Pilot rollout to assess performance
According to the government, the polymer notes will initially be introduced on a trial basis to evaluate how they perform under India’s climatic and usage conditions.
The RBI will assess factors such as durability, handling and circulation before deciding whether the new notes should be introduced on a larger scale.
Officials have clarified that any nationwide rollout will depend entirely on the outcome of these field trials.
Why is RBI testing polymer notes?
The Reserve Bank has maintained that polymer banknotes generally have a longer lifespan than conventional paper currency.
Based on international experience, polymer notes are considered more resistant to wear and tear, moisture and repeated handling, making them suitable for countries where cash remains widely used.
The central bank believes these characteristics could improve the longevity of lower-denomination notes, which typically change hands more frequently.
Paper currency is not being replaced
The government has emphasized that the pilot does not signal the replacement of existing paper currency.
Instead, polymer notes are expected to circulate alongside traditional paper banknotes if the trials prove successful.
In his written reply, Pankaj Chaudhary stated that there is currently no proposal under consideration to replace paper substrate-based banknotes with polymer-based currency.
Impact on digital payments yet to be assessed
The RBI has also clarified that it is too early to determine whether polymer banknotes will influence the adoption of digital payments.
According to the central bank, any assessment can only be made after the new notes enter regular circulation and sufficient operational data becomes available.
The RBI reiterated that cash and digital payment systems complement each other, and both are expected to continue serving different payment needs across the country.
Next steps
With the Finance Ministry’s approval in place, the RBI is expected to proceed with the pilot issuance of polymer ₹10 and ₹20 notes.
The results of the field trials will help determine whether India expands the use of polymer currency in the future or continues relying primarily on traditional paper banknotes.
FAQ
What has the government approved?
The Finance Ministry has approved the RBI’s proposal to issue one billion ₹10 polymer notes and one billion ₹20 polymer notes for field trials.
Why is the RBI introducing polymer notes?
Polymer banknotes are generally more durable than paper notes and can last longer in circulation, reducing replacement costs over time.
Will paper currency be discontinued?
No. The government has clearly stated that there is no proposal to replace existing paper banknotes with polymer notes. Both could coexist if the pilot succeeds.
Will polymer notes affect digital payments?
The RBI says it is too early to assess any impact on digital payments. Cash and digital payment systems are expected to continue operating alongside each other.
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