'Some truth in it': RBI Governor Sanjay Malhotra reacts to plastic currency notes report

The Reserve Bank of India (RBI) is examining the feasibility of introducing polymer-based banknotes in the country, but no decision has been taken yet, Governor Sanjay Malhotra said on Friday amid reports that the central bank may soon launch a pilot project for plastic currency notes.

Addressing a post-monetary policy press conference, Malhotra said the proposal remains at a preliminary stage and the RBI is assessing its costs and benefits before taking a final call.

"As far as polymer notes are concerned, the proposal is under consideration. Whenever a decision is made on it, we will inform you," the governor said.

Referring to recent media reports on the proposal, he said, "Whatever news articles have come, there's some truth in it but there's no decision. It is only under consideration. We are examining the pros and cons of it, and whether it will be worthwhile to do it. It's still at a preliminary stage."

His comments come days after reports suggested that the RBI had revived a decade-old proposal to introduce polymer or plastic currency notes and was considering a pilot project for public use.

According to Business Standard, the proposal was discussed at recent meetings of the RBI's central board and is being evaluated in view of the potential advantages of polymer notes, including longer durability and lower replacement costs compared with conventional paper currency.

The move is also being considered against the backdrop of rising demand for cash in the economy despite rapid growth in digital payments.

Currency in circulation stood at a record high of about ₹42.86 lakh crore as of mid-May, while the RBI's annual report showed that expenditure on printing currency notes rose sharply in FY25 due to higher demand for banknotes.

In 2012, the government approved a field trial involving one billion pieces of ₹10 polymer notes in select cities, primarily to enhance the life span of banknotes. However, the initiative did not progress further due to technological challenges.

Several countries, including Australia, Canada, Singapore and Malaysia, have already introduced polymer banknotes.