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The Reserve Bank of India (RBI) has revived its proposal to introduce polymer (plastic) currency notes. Its wholly-owned subsidiary, Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), has invited global bids for the supply of Biaxially Oriented Polypropylene (BOPP)-based polymer substrate, indicating the likely launch of a pilot project for ?10 and ?20 denomination notes.

What are Polymer Currency Notes?

Polymer banknotes are currency notes manufactured from Biaxially Oriented Polypropylene (BOPP) instead of the conventional 100% cotton-pulp paper currently used in India.

Polymer notes are more durable, water-resistant, tear-resistant, and difficult to counterfeit due to advanced security features such as transparent windows, embedded security elements, and enhanced printing technologies.

More than 60 countries, including Australia (the first country to introduce polymer notes in 1988), use polymer currency either fully or partially. Polymer notes generally last 2.5–4 times longer than paper banknotes.

Why is RBI Considering Polymer Notes?

India spends nearly ?5,000 crore annually on replacing damaged and soiled currency notes. Every year, around 20–24 billion soiled notes are withdrawn under the RBI's Clean Note Policy, with lower denomination notes like ?10 and ?20 deteriorating the fastest because of frequent circulation.

Although polymer notes have higher initial production costs, their longer lifespan reduces replacement frequency and overall lifecycle costs. According to a TERI study commissioned by the RBI, polymer notes also have a lower lifecycle carbon footprint despite a higher initial carbon footprint, as fewer notes need to be manufactured and transported.

Timeline

• 2009: RBI proposed issuing 100 crore ?10 polymer notes.
• 2012: Government approved a pilot project in Kochi, Mysuru, Jaipur, Bhubaneswar, and Shimla.
• The proposal was later shelved due to technological challenges and the disruptions following demonetisation (2016).
• 2026: BRBNMPL revived the initiative by inviting global bids for polymer substrates.

Challenges

Despite their advantages, polymer notes cost 30–60% more than paper notes and their production depends on polypropylene, making costs vulnerable to fluctuations in global crude oil prices. India also imports nearly one-fifth of its polypropylene requirement, increasing supply-chain dependence.

The transition would require recalibration of ATMs, currency sorting machines, vending machines, and banknote processing equipment, resulting in significant implementation costs. Concerns have also been raised regarding plastic waste management and the need for specialised recycling facilities.

Further, with UPI processing over 24,000 crore transactions annually and accounting for nearly 85% of retail digital payments, some question the need for investing in new physical currency technology. However, currency in circulation has continued to rise to over ?41 lakh crore (2025–26), reflecting the continued importance of cash in the informal economy, rural areas, and during emergencies.

RBI's Clean Note Policy

• Introduced in 1999, the Clean Note Policy aims to ensure the circulation of clean and good-quality currency while withdrawing soiled and mutilated notes.
• Banks are required to issue only clean notes, exchange soiled notes without restriction, discontinue stapling of note packets, and use Currency Verification and Processing Systems (CVPS) for sorting and destroying unfit notes.

Currency Management in India

Currency management is governed by the RBI Act, 1934 and the Coinage Act, 2011.

The Reserve Bank of India has the exclusive authority to issue banknotes, manage currency supply, and ensure the circulation of clean notes, while the Government of India issues the ?1 note, mints coins, approves banknote designs, and provides the sovereign guarantee for all currency issued by the RBI.