The RBI Has a New Plan for Indian Banknotes- But What's Driving It?

MUMBAI, India — The Reserve Bank of India (RBI) has initiated a fresh bid to evaluate polymer banknotes in the country, aiming to reduce long-term printing expenditures and improve currency longevity. Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a wholly-owned subsidiary of the central bank, floated a global Expression of Interest (EoI) to procure specialized biaxially oriented polypropylene (BOPP) polymer substrate sheets. The field trial will focus initially on low-denomination ₹10 and ₹20 notes, addressing rapid wear-and-tear issues associated with traditional cotton-based paper currency.

The initiative comes at a time when cash in circulation reached ₹42.52 trillion in mid-July 2026, despite expanding adoption of digital payments like the Unified Payments Interface (UPI).

High Printing Expenses and Paper Note Degradation

India’s existing banknotes are manufactured from a blend of 75% cotton and 25% linen. While cost-effective to produce initially, these paper notes readily absorb moisture, sweat, and dirt in tropical weather conditions, leading to rapid soilage. Low-denomination banknotes like ₹10 and ₹20 circulate heavily among small retailers and transit commuters, giving them a relatively short average lifespan.

According to the RBI's annual disclosures, security printing costs reached ₹4,875 crore in fiscal year 2025–26. Collecting, destroying, and replacing soiled paper currency places a significant recurring financial burden on the central bank. Polymer banknotes, by contrast, last two to six times longer than paper notes and can be recycled into commercial plastic goods at the end of their lifecycle.

Technical Specifications and Procurement Parameters

According to the Expression of Interest issued by BRBNMPL, the central bank seeks 68,000 reams of BOPP-based polymer substrate sheets—split equally between 34,000 reams for ₹10 notes and 34,000 reams for ₹20 notes. Each ream comprises 500 individual sheets.

The tender mandates advanced security integration designed to curb counterfeiting. Features specified include:

• Clear transparent windows containing portrait imagery.

• Metallic numerals and magnetic pseudo threads.

• Shadow images and iridescent color-shifting patterns.

The substrate material must integrate seamlessly with existing high-speed printing presses operated by BRBNMPL and the Security Printing and Minting Corporation of India Limited (SPMCIL).

Background of Previous Field Trials and Global Adoption

The Reserve Bank of India first proposed introducing polymer notes as early as 2007, with formal field trial plans announced in 2009 and 2012–13. Five cities representing varied climatic conditions—Jaipur, Shimla, Bhubaneswar, Mysuru, and Kochi—were selected for early testing. However, those earlier attempts encountered operational technicalities, including ink degradation under extreme heat and note-dispensing jams in automated teller machines (ATMs).

Globally, polymer banknotes were pioneer-developed by Australia in 1988 and are currently utilized by over 50 central banks, including the Bank of England, Bank of Canada, Monetary Authority of Singapore, and the Reserve Bank of New Zealand.

Official Sources Section

According to official disclosures, regulatory procurement notices, and central banking publications:

• Global Expression of Interest and tender documents published by Bharatiya Reserve Bank Note Mudran Private Limited.

• Annual Financial Disclosures and Currency Operations Reports published by the Reserve Bank of India.

• Operational and security printing guidelines issued by the Security Printing and Minting Corporation of India Limited.

• Policy submissions to Parliament maintained by the Ministry of Finance.

Quote Section

According to officials familiar with central bank currency management operations:

"According to officials, field trials for polymer banknotes aim to verify whether modern synthetic substrates can withstand India's diverse climatic conditions and heavy handling practices, ultimately offering a cleaner, more durable alternative to low-denomination paper currency."

Why It Matters

A successful transition to polymer notes for low-denomination currency could significantly lower the Reserve Bank of India’s annual security printing bill, which routinely exceeds ₹4,000 crore. For consumers and small merchants, durable plastic currency means fewer torn or soiled notes rejected during daily transactions. For commercial banks and cash logistics firms, polymer notes offer cleaner processing and enhanced counterfeit protection.

Key Facts at a Glance

• Trial Scope: 68,000 reams of polymer substrate for ₹10 and ₹20 denomination notes.

• Primary Objective: Replace cotton-paper notes to increase currency lifespan and cut printing costs.

• Security Enhancements: Clear transparent windows, magnetic pseudo threads, and shadow images.

• Annual Printing Expense: Security printing costs stood at ₹4,875 crore in FY26.

• Global Precedent: Over 50 nations, including Australia, the UK, and Canada, currently use polymer currency.

Frequently Asked Questions (FAQ)

Will plastic banknotes replace all existing paper currency in India?

No. The RBI is conducting a phased field trial specifically for low-denomination ₹10 and ₹20 banknotes. Paper notes and polymer notes will co-exist in circulation during testing.

What are polymer banknotes made of?

Polymer banknotes are produced from a specialized synthetic substrate, most commonly biaxially oriented polypropylene (BOPP), rather than standard paper or pure plastic.

Why is the RBI focusing on ₹10 and ₹20 notes for the trial?

Low-denomination banknotes experience the highest velocity of circulation and soilage due to frequent handling by consumers and small vendors, making them ideal candidates for durability testing.

How long do polymer banknotes last compared to paper notes?

Studies show polymer notes last two to six times longer than traditional cotton-paper banknotes, resisting moisture, grease, and tear damage.

Source: Reserve Bank of India, Bharatiya Reserve Bank Note Mudran Private Limited, Ministry of Finance, Security Printing and Minting Corporation of India Limited