GUWAHATI: The Centre has approved the Reserve Bank of India’s (RBI) proposal to introduce polymer banknotes in ₹10 and ₹20 denominations for field trials, while clarifying that there is no proposal to replace existing paper currency with polymer notes, the Ministry of Finance informed the Lok Sabha.
In a written reply to an unstarred question in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the RBI, on the recommendation of its Central Board, had submitted a proposal under Section 25 of the Reserve Bank of India Act, 1934, to introduce one billion polymer banknotes each in the ₹10 and ₹20 denominations for field trials.
The government has approved the proposal, and a decision on the regular issuance of polymer banknotes in these denominations will be taken after the successful completion of the field trials.
According to the RBI, international studies indicate that polymer banknotes have a significantly longer lifespan than paper-based currency notes. The central bank said the initiative remains at a preliminary stage, and any impact on digital payments can only be assessed after the regular issuance of polymer banknotes.
The Ministry of Finance clarified that banknotes and digital payment systems are complementary modes of payment available to the public. It added that the proposed polymer banknotes will be issued alongside existing paper-based currency notes during the field trials.
The government also reiterated that there is no proposal to replace existing paper currency with polymer substrate-based banknotes.