RBI seems to have shelved its project to implement plastic banknotes due to concerns about the ability of the currency notes to withstand Indian climatic conditions, characterized by high temperatures.
Moreover, with the Unified Payments Interface (UPI)-based transactions growing by leaps and bounds and the planned launch of Central Bank Digital Currency (CBDC) in FY23, the need for introducing plastic banknotes has diminished.
Per RBI’s 2015-16 annual report, a billion pieces of banknotes in denomination of Rs. 10 were to be printed on all available plastic (polymer) substrates and issued to the public in five cities having different climatic zones — Kochi, Mysuru, Shimla, Jaipur and Bhubaneswar, on a trial basis.
The Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) and the Security Printing and Minting Corporation of India Limited (SPMCIL) have taken up this project.
But not much headway could be made in this regard due to reasons such as the possibility of plastic banknotes reacting to high temperatures and catching fire and UPI-based transactions gaining traction.
While polymer banknotes have a long life, weigh less and are waterproof vis-a-vis paper bank notes, Bankers emphasise that once the former react to high temperatures, it may be difficult to get them exchanged.