RBI Gets Government Nod to Issue ₹10 and ₹20 Polymer Banknotes

Context

The Approval

• The RBI, on the recommendation of its Central Board, sent the proposal to the government under Section 25 of the RBI Act, 1934.
• The proposal covered both the 1 billion-piece field trial in each denomination and regular issuance thereafter.
• The reply came as a written answer to a Lok Sabha question.

Section 25 of the RBI Act, 1934 — The Legal Basis

• It provides that the design, form and material of banknotes shall be approved by the Central Government on the recommendation of the RBI’s Central Board.
• This is why a change of substrate from paper to polymer requires government approval, not merely an RBI decision.

Why Polymer?

• Longer lifespan: the RBI cited international studies showing polymer notes last significantly longer than paper notes — typically 2.5 to 4 times.
• Lower replacement cost over time, despite higher unit printing cost.
• Better resistance to dirt, moisture and wear — relevant for low-denomination notes, which circulate hardest and soil fastest.
• Stronger security features, including transparent windows that are difficult to counterfeit.
• ₹10 and ₹20 are the correct test denominations precisely because they have the shortest life in circulation.

What Paper Notes Are Made Of?

• Indian “paper” banknotes are not wood-pulp paper — they are made from cotton pulp and plant fibres, giving greater durability and a distinctive feel.
• Polymer notes use a biaxially oriented polypropylene (BOPP) substrate.