In a major development, the Center has approved the proposal of Reserve Bank of India (RBI) to introduce plastic notes in India soon. However there will be an initial field trial of notes with denomination of ₹10 and ₹20. If the pilot project is successful then they will be regularized. The step to introduce plastic notes in India was initiated by RBI as these notes last longer and are more strong.
The government however has clarified that paper notes will not be withdrawn. Both plastic notes and paper currency will be circulated. There is no proposal to completely replace paper banknotes.
While answering a question raised in the Lok Sabha the Minister of State for Finance Pankaj Chaudhary threw light on the matter. He said, “The Reserve Bank of India (RBI), with the recommendation of its Central Board, had sent a proposal to the Government in terms of Section 25 of the Reserve Bank of India Act, 1934, for introduction of one billion pieces each of 10 and 20 polymer banknotes for field trials and for regular issuance of polymer banknotes in these two denominations after successful completion of field trials. The proposal has been approved by the Government.”
He further added, “RBI had informed that as per international studies, the life span of polymer banknotes is significantly higher than that of paper banknotes. The introduction of polymer banknotes is currently in a preliminary phase and the impact on digital payments, if any, could be ascertained only after regular issuance of these notes.”
The Minister clarified that, “Moreover, banknotes and digital payment systems are complementary payment tools available to public. As per RBI, Polymer banknotes are proposed to be issued along with paper substrate- based banknotes and that there is no proposal to replace paper currency with polymer substrate- based banknotes.”
In June there was a rumor on social media that paper notes will be replaced completely with plastic notes in India, however later a fact check proved the claims to be false and baseless. If we take a look at the history of plastic notes, they have been in use in Australia since 1988. And it is worth mentioning here that plastic notes are there in more than 50 countries worldwide. It has been seen that they last longer and are comparatively superior to paper currency.
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