RBI to print plastic notes from beginning of next year:Governor hints ₹10, ₹20 other low value notes will be of plastic initially

RBI is preparing to launch long-lasting polymer, ie, plastic notes in the country from the beginning of the next financial year, ie, 2027-28. After a three-day meeting of RBI’s Monetary Policy Committee (MPC) Governor Sanjay Malhotra announced on August 5 that initially polymer notes will be issued in small denominations, i.e., low-value currency notes. These have the highest circulation and usage in the market. Polymer notes last for 30 years During the press briefing, Governor Sanjay Malhotra stated that in many countries around the world such as Britain, Australia, and Canada, polymer currency notes have been successfully in use for more than 30 years. In India, paper notes, especially small notes of ₹10, ₹20, and ₹50, get dirty or start tearing very quickly. With the introduction of polymer notes, the lifespan of notes will increase, they will not get damaged by water or moisture, and the government’s expenditure on printing new notes repeatedly will also reduce. Know the important things related to this news in QA: Question 1: What are polymer notes and why is the government introducing them? Answer: Polymer banknotes are printed on a special type of plastic material i.e. polymer substrate instead of paper. They feel as light as regular notes to touch, but they don’t rot even when soaked in water and last for a long time. Main reasons for introducing them- Question 2: Will old paper notes be discontinued? Answer: Absolutely not. The government and RBI have made it completely clear that the introduction of polymer notes will not take old paper notes out of circulation. Question 3: When was the proposal for polymer notes made? Answer: India first attempted to introduce polymer notes in 2012 to increase the shelf life of notes, but the project was halted due to technical reasons. Question 4: In which countries of the world are plastic notes in circulation? Polymer banknotes have been introduced in circulation in more than 60 countries of the world. These include countries like Australia, Canada, United Kingdom (UK) and New Zealand. Question 5: When were notes changed in India? From independence till now, decisions to demonetize or discontinue high-value notes have been taken on a large scale 3 times in India 1. First time – January 1946 (British era/just before independence): What happened: The then British government discontinued the large denomination notes of ₹500, ₹1,000 and ₹10,000. Purpose: To bring out black money and illegal earnings during the war. Later: In 1954, the government reintroduced notes of ₹1,000, ₹5,000 and ₹10,000. 2. Second time – January 1978 (Morarji Desai government): What happened: The Janata Party government discontinued large denomination notes of ₹1,000, ₹5,000 and ₹10,000. Objective: To prevent the use of black money in elections and curb corruption. 3. Third time – 8 November 2016 (Narendra Modi Government): What happened: At 8 PM, Prime Minister Modi declared the existing ₹500 and ₹1,000 notes invalid overnight. Change: In their place, a new ₹500 note was issued and for the first time, a new ₹2,000 note was introduced. Withdrawal of ₹2,000 note (May 2023): On 19 May 2023, RBI announced the withdrawal of ₹2,000 notes from circulation under the ‘Clean Note Policy’. However, it was not called demonetization as time was given to deposit or exchange them at banks.