RBI Revives Polymer Currency Note Plan Amid Rising Cash Demand

The Reserve Bank of India (RBI) is preparing to revive its long-pending proposal to introduce polymer-based banknotes in the country, according to people familiar with discussions held at recent central bank board meetings.

The proposal was reviewed during the RBI board meetings held in Patna and Mumbai, where officials discussed the possibility of issuing plastic currency notes to improve durability and lower long-term printing costs. A pilot rollout for polymer notes is expected to be announced in the coming months, as per sources aware of the matter.

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The move comes at a time when currency circulation in India continues to rise sharply despite sustained growth in digital payments.

Currency Printing Costs Rise

According to the RBI’s annual report for FY25, expenditure on printing banknotes rose to ₹6,372.8 crore during the year, compared with ₹5,101.4 crore in FY24. The increase was attributed mainly to a higher demand for printed currency notes.

Data released by the central bank also showed that currency in circulation rose 11.5% year-on-year to ₹42.86 lakh crore as of May 15. During the first one-and-a-half months of FY27 alone, currency circulation expanded by ₹1.15 lakh crore.

Officials familiar with the discussions said polymer notes are being considered because of their longer shelf life and lower replacement requirements compared with paper-based notes currently in circulation.

Disposal Of Soiled Notes Remains High

The RBI disposed of 23.8 billion soiled banknotes during FY25, up 12.3% from 21.24 billion pieces in the previous financial year. The highest number of withdrawn notes belonged to the ₹500 denomination, followed by ₹100 notes.

Lower denomination notes such as ₹10 and ₹20 continue to witness high usage, although their contribution to the total value of notes in circulation remains limited. RBI data showed the ₹10 denomination accounted for 0.7% of total currency value in circulation during the last two years, while ₹20 notes represented around 0.8%.

The central bank has also attempted to encourage the use of coins in recent years. Total coin supply increased from around 1.2 billion pieces in FY24 to nearly 1.5 billion pieces in FY25. The ₹5 coin accounted for around 800 million pieces, while ₹20 coins contributed about 400 million pieces.

Earlier Pilot Was Shelved

India had earlier planned to introduce polymer banknotes in 2012, when the government approved a field trial involving one billion ₹10 plastic notes across five cities. The proposal was later shelved because of technological and operational challenges.

Sources indicated that many of those technical issues, including ATM compatibility and note recognition systems, have now been addressed.

More than 60 countries have already adopted polymer banknotes. Australia introduced the world’s first polymer note in 1988, followed by countries including Canada, Singapore, Malaysia and Romania. The RBI has not yet officially announced timelines or denominations for the proposed pilot programme.