RBI Likely To Reintroduce Plastic Currency Notes Amid Rising Costs

New Delhi, May 29 (KNN) The Reserve Bank of India (RBI) is set to reintroduce the idea of plastic currency notes, driven by surging demand, rising printing costs, and a sharp increase in soiled note disposal.

The RBI has revived discussions on introducing polymer (plastic) banknotes for public circulation, with the matter having been deliberated at the central bank’s last two board meetings in Patna and Mumbai, Business Standard reported, citing multiple sources.

A pilot project to introduce plastic banknotes for public use is likely to be announced soon in light of the perceived advantages of reduced production costs and their longer durability.

"There are clear advantages in the cost of production of such notes compared to the paper notes currently being used. Moreover, automated teller machines (ATMs) would be enabled to dispense polymer-based notes. We have the wherewithal to do this now," a source familiar with the board’s deliberations told Business Standard.

Why Now: Cost, Wear and Demand

Three factors are driving the decision. First, the cost of printing currency has risen sharply — from Rs 5,101 crore in FY24 to Rs 6,372.8 crore in FY25. 

Second, the disposal of soiled banknotes reached 23.8 billion pieces in FY25, up 12.3 per cent year-on-year, with Rs 500 and Rs 100 denominations accounting for the bulk. Polymer notes have a significantly longer shelf life.

Third, currency in circulation (CiC) has hit a record high of Rs 42.86 trillion as of May 15, 2026 — growing 11.5% year-on-year — reflecting sustained cash demand despite the continued growth of digital payments.

Global Norm

Polymer banknotes are already in use across approximately 60 countries. Australia pioneered the format in 1988, followed by Singapore, Indonesia, Thailand, and Malaysia. Romania became the first European country to adopt plastic notes in 1998, and Canada followed in 2011.

India is not new to the concept. In 2012, the UPA government approved a field trial of one billion Rs 10 polymer notes across five cities to improve durability, but the project was shelved due to ATM compatibility issues.

Sources now say those challenges have been resolved, with ATMs capable of identifying such notes.

(KNN Bureau)