RBI working to give banknotes in your pocket a longer lease on life
The RBI is exploring ways to extend the life of banknotes, including surface coatings and polymer notes for lower denominations, Deputy Governor Shirish Chandra Murmu said in the central bank’s monthly bulletin.
The Reserve Bank of India (RBI) is actively investigating methods to extend the longevity of banknotes, as disclosed in the central bank's recent monthly bulletin. According to Deputy Governor Shirish Chandra Murmu, the RBI is considering various approaches, such as applying surface coatings to the banknote substrates and introducing polymer notes for lower denominations.
Murmu expressed these thoughts in an article titled "Strengthening Collaboration to Preserve Sovereignty: Collaborative Cash Ecosystems - Global Strategies to Preserve Trust and Sovereignty." Currently, there are approximately 176 billion banknotes in circulation across India, compared to around 56 billion US dollar bills and 30 billion euro banknotes at the end of last year.
The Indian government has previously approved the RBI's proposal to introduce polymer notes in the ₹10 and ₹20 denominations for field trials, a plan that was first introduced over a decade ago.
Notably, the central bank has maintained that there is no intention to replace existing paper-based currency with RBI plastic notes. Murmu highlighted that while cash's share of individual transactions is declining due to the rise in digital payment adoption, the overall demand for currency continues to grow at a double-digit rate. This discrepancy presents challenges for the RBI's production and distribution planning.
In addition to extending banknote lifespans, the RBI is also focusing on reducing the carbon footprint associated with the cash cycle. This includes optimizing the distribution network for improved efficiency and enhancing the disposal of "banknote briquettes." Regarding the potential impact of RBI plastic notes on digital payments, Minister of State for Finance Pankaj Chaudhary stated that the currency proposal is still in the preliminary stage, and any effects can only be evaluated once regular issuance commences.
He emphasized that physical banknotes and digital payment systems will continue to coexist, serving as complementary means of transaction.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
