RBI Deputy Governor Shirish Chandra Murmu said the central bank is examining measures including surface coatings on banknote substrates and the use of polymer notes for lower denominations.
Murmu made the comments in an article titled “Strengthening Collaboration to Preserve Sovereignty: Collaborative Cash Ecosystems – Global Strategies to Preserve Trust and Sovereignty.”
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As of today, 176 billion banknotes are in circulation in India. By comparison, roughly 56 billion US dollar bills and 30 billion euro banknotes were in circulation at the end of last year.
The Indian government has already approved the central bank’s proposal to introduce RBI polymer notes in the ₹10 and ₹20 denominations for field trials, reviving a plan that was first announced more than a decade ago. At the same time, the Centre has made it clear that there is no proposal to replace existing paper-based Indian currency with RBI plastic notes.
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Currency in circulation continues to grow at double-digit rates even as cash’s share of individual transactions declines, thanks to growing digital payment adoption, said Murmu. “That combination makes future demand harder to predict, which complicates our planning for production and distribution capacity.”
The central bank is also working to reduce the carbon footprint of the cash cycle: optimising its distribution network for efficiency and moving up the value chain in how it disposes of “banknote briquettes.”
Will Indian plastic notes affect digital payments?
On whether RBI plastic notes could affect digital payments, Minister of State for Finance Pankaj Chaudhary said the currency proposal is still at a preliminary stage and any impact can only be assessed after regular issuance begins. He added that physical banknotes and digital payment systems complement each other and both remain available to the public.
The government has also clarified that RBI polymer notes will circulate alongside existing paper-substrate Indian currency. It said there is no proposal to replace paper banknotes entirely with polymer-based notes.