Plastic Banknotes

Prelims:

Indian Economy

Mains:

GS Paper III-Indian Economy

Current relevance:

The Reserve Bank of India's (RBI) currency printing arm has invited global Expressions of Interest (EOI) for supplying polymer substrates with embedded security features, marking a significant step towards the possible introduction of plastic banknotes in India.

Highlights:

Historical Background:

1.        The RBI initially proposed the introduction of polymer banknotes in 2009 to enhance the durability and lifespan of currency notes.

2.      In 2012, a pilot programme for ₹10 polymer banknotes was planned in Kochi, Mysuru, Jaipur, Bhubaneswar, and Shimla to evaluate their performance under diverse climatic conditions.

3.      The pilot initiative was subsequently discontinued owing to technological challenges encountered during implementation.

4.      The proposal has now been revived, with polymer banknotes once again under active consideration through fresh procurement initiatives.

   Plastic Banknotes:

5.      They are polymer-based currency notes made from biaxially oriented polypropylene, a material derived from petroleum and natural gas.

6.      Advantages:

                     i.            Have a lifespan that is 2.5–4 times longer than conventional cotton-paper banknotes.

                   ii.            Enhance durability reduces the need for frequent replacement, improving the efficiency of currency management.

                 iii.            Advanced security features provide greater protection against counterfeiting and currency fraud.

                iv.            Their extended circulation life can lower overall lifecycle costs despite higher initial manufacturing expenses.

                  v.            The reduced requirement for repeated printing and transportation may result in a lower overall carbon footprint.

Source: THE HINDU - https://www.pressreader.com/india/the-hindu-international-9bn2/20260722/282132118219797