The primary objective of introduction of polymer notes is to increase its life and not to combat counterfeiting.
Kindly note the image has been posted only for representational purposes. Photograph: Kind courtesy Shantanu Kumar/Pexels.com
Reserve Bank of India Governor Sanjay Malhotra on Friday said that a proposal for polymer banknotes is under consideration with the banking regulator evaluating the pros and cons of the same.
“The proposal for polymer notes is under consideration. Whatever news articles have come, there is some truth in it,” Malhotra said in the post-policy media interaction.
He was responding to questions about media reports saying the central bank was exploring introduction of such notes.
The paper currently being used for printing of banknotes is made by using 100 per cent cotton.
Key Points
- RBI Governor Sanjay Malhotra confirmed that a proposal to introduce polymer banknotes is under consideration.
- The central bank is evaluating advantages, challenges and overall feasibility before taking any decision on implementation.
- RBI’s survey showed continued strong preference for cash despite rapid growth in digital payment adoption.
- Banknotes in circulation rose sharply in FY26, reflecting sustained demand for physical currency across India.
- A previous polymer banknote pilot approved in 2012 was shelved because of technological challenges.
Polymer Notes Under Review
“We are examining the pros and cons of it and whether it will be worthwhile to do it. It is still at a preliminary stage,” Malhotra said in his post policy press meet.
According to the central bank’s annual report, a survey was conducted on households’ payment behaviour among individuals and small retail sellers to understand usage and preference for cash and digital modes of payment.
The survey results indicated continued strong preference for usage of cash.
This is also reflected in the robust growth of banknotes in circulation for FY26.
Banknotes In Circulation Rise
The RBI report said the value of banknotes in circulation increased by 11.9 per cent year-on-year (Y-o-Y) to Rs 41.23 trillion by the end of March 2026.
In volume terms it increased by 10.5 per cent Y-o-Y to 171.32 billion.
In value terms, the Rs 500 note constituted 85.5 per cent of the total, marginally down from 86 per cent last year.
The smaller denomination notes, Rs 10 and Rs 20, constituted 0.7 per cent each, the report said.
Security Printing Costs Decline
According to the report, the expenditure incurred on security printing during the year was Rs 4,875.2 crore in FY26 as against Rs 6,372.8 crore during the previous year, due to reduced indent of banknotes during 2025-2026.
Past Polymer Trial Challenges
There were similar efforts in the past.
In 2012, the then government decided to introduce one billion pieces of Rs 10 banknotes on polymer substrate on a field trial basis in five cities.
The primary objective of introduction of polymer notes was to increase its life and not to combat counterfeiting, the then United Progressive Alliance government had said.
The project was shelved due to technological challenges.
Feature Presentation: Ashish Narsale/Rediff
