The Government of India has approved the Reserve Bank of India’s proposal to run field trials of polymer banknotes in the ₹10 and ₹20 denominations. The trial will cover 100 crore notes of each denomination, with a combined face value of ₹3,000 crore. The approval came after the RBI, on the recommendation of its Central Board, moved the proposal under Section 25 of the Reserve Bank of India Act, 1934, which governs the design, form and material of banknotes.
What Are Polymer Banknotes?
Polymer banknotes are currency notes printed on a thin, flexible plastic substrate instead of the cotton-based paper used for conventional notes. The material is a synthetic polymer known as biaxially oriented polypropylene (BOPP), which is melted, stretched and cooled into a transparent film before being coated with layers of opaque ink.
Despite being commonly described as plastic notes, they are not rigid like credit or debit cards. They remain lightweight, foldable and easy to handle, so they feel broadly similar to paper notes in everyday use. The key difference lies in the base material: polymer is non-fibrous and non-porous, which means it does not absorb water, dirt or oil the way cotton paper does.
Australia was the first country to issue a full series of polymer banknotes, in 1988, a technology it developed with the Commonwealth Scientific and Industrial Research Organisation (CSIRO). Since then, more than 60 countries, including the United Kingdom, Canada, New Zealand, Singapore, Malaysia and Thailand, have adopted polymer notes in full or in part.
What Has the Government Approved?
Minister of State for Finance Pankaj Chaudhary announced the approval in a written reply to the Lok Sabha on 27 July 2026. The RBI, with the recommendation of its Central Board, had proposed the introduction of 100 crore pieces each of ₹10 and ₹20 polymer banknotes for field trials, to be followed by regular issuance in these two denominations if the trials succeed.
Section 25 of the Reserve Bank of India Act, 1934 is the legal basis for the decision. The provision states that the design, form and material of banknotes shall be such as may be approved by the Central Government after consideration of the recommendations made by the Central Board of the RBI. In other words, the RBI proposes the note design and material, but the final say rests with the government.
The government has made clear that this is a trial, not a changeover. Polymer notes will circulate alongside existing paper notes, and there is no proposal to replace paper currency entirely. The RBI has told the government that the introduction is still in a preliminary phase, and any impact on digital payments can only be assessed after the notes are issued regularly. Banknotes and digital payment systems remain complementary modes of payment available to the public.
Why the RBI Wants Polymer Notes
The Durability Advantage
The RBI’s core motivation is durability. The ₹10 and ₹20 notes change hands far more often than higher-value notes, so they wear out the fastest, especially during the monsoon when notes are exposed to moisture. International studies cited by the RBI show that polymer notes last significantly longer than paper notes, typically two to five times longer depending on the denomination.
A longer note life has a direct cost benefit. Although a single polymer note costs more to produce than a paper one, the need to reprint and replace notes falls sharply. In the three years up to 2026, the RBI supplied about 8,270 crore pieces of fresh notes and destroyed roughly 6,213 crore pieces of soiled notes, which means for every four new notes issued, three old ones had to be scrapped. A longer-lived note reduces both the printing bill and the burden on currency-processing machines.
The RBI’s annual report shows that currency in circulation stood at about ₹41.23 lakh crore at the end of March 2026, up 12% year-on-year, even as digital payments have grown rapidly. The ₹500 note alone accounts for close to 86% of the total value of notes in circulation.
The Security Advantage
Polymer notes also offer stronger protection against counterfeiting. The plastic substrate allows security features to be embedded into the material itself rather than printed on top of it. These include transparent see-through windows, micro-optic holograms and specialised security threads and inks, all of which are far harder to replicate than the watermarks and threads used on paper notes.
Most counterfeit notes are produced on paper, so switching the most-circulated lower denominations to polymer makes fakery considerably more difficult. In 2025-26, the number of counterfeit notes detected in the banking system rose to about 2.3 lakh pieces, up from 2.17 lakh in the previous year, underscoring the continuing challenge of fake currency.
The Earlier Trial That Never Took Off
This is not India’s first attempt at polymer currency. In 2012, the government approved a field trial of one billion ₹10 polymer notes across five cities chosen for climatic diversity: Jaipur, Shimla, Bhubaneswar, Mysuru and Kochi. The stated objective then, as now, was to extend the life of banknotes rather than to fight counterfeiting.
The 2012 trial, however, never progressed. In its annual report for 2014-15, the RBI said the ₹10 plastic notes were technically evaluated but that certain technical infirmities emerged and the process could not be taken forward. Note-counting and sorting machines at banks were not calibrated to handle two different materials at once, and polymer notes, being thinner and more slippery, caused frequent errors in automated processing.
Those technological limitations have since been largely addressed. Modern currency-verification machines and ATM technologies can handle polymer notes more effectively, which is one reason the RBI has revived the idea. The 2026 approval extends the earlier plan to two denominations, ₹10 and ₹20, instead of one.
How Polymer Notes Compare With Paper Notes
| Feature | Paper (Cotton) Notes | Polymer Notes |
|---|---|---|
| Base material | 100% cotton and cotton-rag fibre | Biaxially oriented polypropylene (BOPP) film |
| Lifespan | Shorter, wears out faster with handling | Two to five times longer in circulation |
| Moisture and dirt resistance | Lower, absorbs water and oil | Higher, non-porous surface repels them |
| Security features | Watermark, security thread, intaglio printing | See-through windows, holograms, embedded threads |
| Production cost | Lower per note | Higher per note upfront |
| Recyclability | Limited | Can be granulated and recycled into plastic products |
| Counterfeiting risk | Higher, most fakes are printed on paper | Lower, features are embedded in the substrate |
Polymer notes are not without drawbacks. Users in countries that have adopted them often complain that the notes are slippery when dry, tend to stick together in bundles, and crease sharply along fold lines. Notes can also shrink or fade if exposed to excessive heat. For these reasons, some central banks have added raised printed patterns to improve grip.
India’s Currency Printing Setup
Where Notes Are Printed
Banknotes in India are printed at four currency presses. Two are owned by the government through the Security Printing and Minting Corporation of India Ltd (SPMCIL), located at Nashik in Maharashtra and Dewas in Madhya Pradesh. The other two belong to the RBI through its wholly owned subsidiary, the Bharatiya Reserve Bank Note Mudran Private Ltd (BRBNMPL), at Mysuru in Karnataka and Salboni in West Bengal.
Coins, by contrast, are minted at four mints owned by SPMCIL at Mumbai, Hyderabad, Kolkata and Noida, and are issued for circulation only through the RBI under Section 38 of the RBI Act. The one-rupee note is the exception in currency too: it is issued by the Government of India under the Coinage Act, 2011, and is treated as a rupee coin for the purposes of the RBI Act.
Where the Substrate Will Come From
The polymer substrate for the trial will be procured globally. BRBNMPL has floated a global tender inviting expressions of interest from manufacturers who can supply opacified polymer sheets with embedded security features. Initial requirements are pegged at close to 68,000 reams of substrate, split roughly evenly between the two denominations, a quantity that covers only the trial phase.
The tender carries stringent security conditions. Bidders must obtain government security clearance, firewall any operations in China or Pakistan from the India contract, avoid sourcing raw materials for India-specific substrate from these two countries, and undertake not to supply the India-specific substrate to any third country.
The printing of the trial notes will be handled by BRBNMPL and SPMCIL. India has worked to reduce its dependence on imported currency materials: the Bank Note Paper Mill India Pvt Ltd, a joint venture of BRBNMPL and SPMCIL, began domestic production of watermarked banknote paper around a decade ago, and BRBNMPL’s ink factory in Mysuru became operational in 2018.
The Way Forward
The field trial is expected to be conducted in a limited number of cities, though the RBI has not yet specified the locations or a firm timeline. After the trial notes are assessed for durability, handling and public acceptance, the RBI will decide whether to move to regular issuance of polymer notes in these two denominations. Any decision to extend polymer to higher-value notes would depend on operational feasibility, ATM compatibility, printing costs and infrastructure readiness.
A broader transition to polymer would need to be gradual. Considerable investment has already gone into paper-based printing facilities, and a switch would require fresh investment in new presses, sorting machines and ATM calibration. India could follow the pattern of several countries that use polymer only for selected denominations while keeping paper for others.
The RBI’s position is that banknotes and digital payments will continue to coexist. Even with rapid growth in UPI and other digital channels, cash demand in India remains strong, which is why a durable, longer-lasting note is seen as a worthwhile experiment. The outcome of the trial will determine whether India joins the growing list of economies that have shifted at least part of their currency to polymer.
Key Takeaways
- The government approved the RBI’s proposal for field trials of 100 crore polymer banknotes each of ₹10 and ₹20, together worth ₹3,000 crore.
- The proposal was cleared under Section 25 of the Reserve Bank of India Act, 1934, which says the design, form and material of banknotes need the Central Government’s approval after considering the Central Board’s recommendations.
- Polymer banknotes are printed on biaxially oriented polypropylene (BOPP), a non-fibrous and non-porous material that does not absorb moisture or dirt.
- India’s first polymer trial, announced in 2012 for ₹10 notes across Jaipur, Shimla, Bhubaneswar, Mysuru and Kochi, was shelved because of technical infirmities in note processing.
- Banknotes are printed at four presses: SPMCIL’s presses at Nashik and Dewas, and the RBI subsidiary BRBNMPL’s presses at Mysuru and Salboni.
- Australia issued the world’s first full polymer note series in 1988, and more than 60 countries now use polymer notes in some form.
