RBI to trial Rs 10, Rs 20 plastic notes worth Rs 3,000 Crore; Centre says no proposal to replace paper notes

The mention of the two denominations of banknotes is the first official confirmation of which notes will be targeted in the RBI’s field trials. On July 17, the Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) – a wholly-owned subsidiary of the RBI – had floated a global tender for 3.4 crore polymer sheets to print banknotes in two denominations. The tender had said the amount was an “immediate requirement” and once field trials were successful, “we intend to go for procurement of larger quantity of substrate across different denominations”.

While notes of Rs 10 and Rs 20 denomination make up almost a quarter of all currency notes in terms of pieces, they account for a mere 1.3% of the value of notes in circulation.

This is the RBI’s second attempt to experiment with plastic notes. In September 2009, it had invited bids to procure 100 crore pieces of Rs 10-notes. These notes were to be introduced for a field trial in Kochi, Mysuru, Shimla, Jaipur and Bhubaneswar — different climatic zones that would test the resilience of the notes.

The trial, however, went nowhere due to “certain technical infirmities”.

First issued by Australia in 1988, plastic banknotes are now used in more than 50 countries and are widely considered to be far superior to paper ones.

“RBI had informed that as per international studies, the life span of polymer banknotes is significantly higher than that of paper banknotes. The introduction of polymer banknotes is currently in a preliminary phase and the impact on digital payments, if any, could be ascertained only after regular issuance of these notes. Moreover, banknotes and digital payment systems are complementary payment tools available to public,” Chaudhary further said in his written response in Lok Sabha on Monday.