RBI Plans Polymer Banknotes by FY28

The Reserve Bank of India (RBI) has planned the introduction of polymer banknotes by the beginning of FY28, which refers to 2027-28. The pilot programme is examining the suitability of plastic-based notes under Indian climatic conditions and existing currency infrastructure.

Polymer Banknotes

Polymer banknotes are currency notes made from a plastic-based substrate instead of cotton-based paper. Several countries have used polymer notes for lower denominations because they are more durable and can include advanced security features. Polymer notes generally last two to four times longer than conventional paper notes. They are designed with features such as see-through windows and micro-optic holograms, which are used to reduce counterfeiting.

Planned Denominations and Trial Phase

The initial rollout in India is planned for ₹10 and ₹20 denominations. The Government of India has authorised the RBI to print up to 2 billion polymer banknotes for the trial phase, with one billion notes each of ₹10 and ₹20. Bharatiya Reserve Bank Note Mudran Pvt Ltd (BRBNMPL), an RBI subsidiary, has issued a global tender for the supply of polymer substrate sheets. The bidding window for the tender remains open until 18 August 2026.

Currency Management and Legal Tender

The RBI has stated that polymer notes will not replace paper currency entirely. Polymer and conventional paper notes will circulate together as legal tender in India. Legal tender is money that must be accepted for payment of a debt within a jurisdiction. In India, banknotes issued by the RBI under the Reserve Bank of India Act, 1934, are legal tender.

Important Facts for Exams

• The RBI is India’s central bank and was established in 1935 under the Reserve Bank of India Act, 1934.
• Polymer banknotes have been used in countries such as Australia, Canada, and the United Kingdom.
• India introduced Mahatma Gandhi series banknotes in 1996, and later updated the series with new security features.
• Utkarsh 2029 is an RBI programme linked to strengthening supervision, digitalisation, and currency management.

Banknote Security and Substrate Upgradation

The RBI’s plan is linked to upgrading banknote substrates and strengthening security features under the Utkarsh 2029 programme. Banknote substrate refers to the material on which currency notes are printed. Security features in modern banknotes include watermarks, security threads, intaglio printing, latent images, and optically variable elements.