editor_nz
The debate about plastic currency has dropped from the skies. The RBI is reportedly planning to introduce a new pilot initiative with the use of plastic (polymer) banknotes soon. In case of success of the experiment, some of the currency notes may be printed on polymer-based material instead of paper in the future in India.
However, what is a plastic note?
Plastic notes are made from a special polymer material that is believed to be more durable, more secure and more robust than regular paper money. Polymer banknotes are already in use in several countries, such as Australia, Canada, the UK and New Zealand.
The idea is not new in India. RBI had to do trials with plastic notes a few years ago. But it was not expanded to wide-scale application during that time. However, it looks like the central bank is mulling on the plan again now.
Why is the RBI thinking about resuming the use of polymer notes?
It is widely believed that old paper money deteriorates fairly quickly, experts say. Notes can tear, become dirty and have a limited lifespan. Polymer notes, however, are intended to provide much longer service. They are more durable and can withstand moisture, water and normal use, thus needing less frequent changing.
Moreover, polymer notes can be better equipped with advanced security features which makes them difficult to counterfeit. It’s one of the main attractions of the technology for many central banks worldwide.
There would be challenges to make the transition, though.
It is typically more expensive to print the polymer notes than paper notes. Besides, the nation’s banks, including the ATM machines, currency sorting machines and other banking infrastructure, might have to be changed to get ready for the new notes.
This is the reason the RBI is mulling a pilot project first. The aim is to evaluate the performance of polymer notes in Indian environment. Various issues including durability, security, operational efficiency and public acceptance will be strongly considered during the trial.
If the pilot project is successful, it may herald a change in the design and composition of Indian currency in the near future. A few of the notes in your wallet could contain polymer, not paper, one day.
For the time being, the RBI has not made a final decision. However, it is seen as a crucial step in modernizing the banking and currency management systems in India.
The next big challenge for India now is if it will follow in the footsteps of Australia, Canada and the United Kingdom and move to a more widespread implementation of plastic money.
