New money? India's currency might soon get a plastic makeover

India's banknotes may soon get a plastic makeover.The country is moving ahead with its plans to explore polymer banknotes as the Reserve Bank of India's currency printing subsidiary has invited global and domestic manufacturers to bid for the specialised material needed to print such notes. Initially, the notes are likely to be in the lower denominations of Rs 10 and 20, according to sources cited by ANI. Bharatiya Reserve Bank Note Mudran (BRBNMPL) has issued an Expression of Interest (EoI) seeking suppliers of opacified polymer substrate sheets embedded with security features. According to ET, interested manufacturers have been asked to submit their bids by August 18.The move could pave the way for India's first polymer banknotes, replacing the specialised paper that has been used to print the country's currency for nearly a century. What are polymer banknotes?Polymer banknotes are made using a special plastic substrate instead of the cotton-pulp paper currently used for Indian currency.First developed in Australia, polymer notes have since been adopted by countries including the United Kingdom, Canada, New Zealand and Singapore.As compared to conventional paper notes, polymer banknotes are more durable, resistant to moisture and dirt, and can withstand heavy circulation for much longer. Studies conducted globally have shown that polymer notes can last at least twice as long as paper notes and, in some cases, up to five times longer.Because they remain in circulation for longer periods, they also need to be replaced less frequently, potentially reducing printing and replacement costs over time.Tender sets strict eligibility and security conditionsThe proposed procurement comes with detailed eligibility requirements and security safeguards.Only manufacturers that have supplied polymer banknote substrates with embedded security features to central banks or banknote printing organisations for at least the past three years are eligible to participate. They must also be capable of supplying at least 20,400 reams, equivalent to 30% of the indicative requirement.For its initial requirement, BRBNMPL has estimated a demand of 68,000 reams, with around 34,000 reams each earmarked for two denominations. The company has clarified that this quantity is only for initial requirements and that larger orders are likely only after successful field trials.The tender also bars bidders from sourcing raw materials for India-specific banknote substrates from China or Pakistan. Manufacturers will require government security clearance, must ring-fence any operations in those countries from the India contract, and must undertake not to supply India's customised substrate to any third country.Why RBI is exploring polymer currencyOne of the key reasons behind the proposal is the deterioration of paper currency caused by frequent handling and India's varied climatic conditions.According to RBI data, nearly two lakh damaged currency notes are withdrawn and destroyed every year. High-value denominations such as Rs 100 and Rs 500 account for a large share of the damaged notes removed from circulation.Polymer notes can also incorporate advanced security features such as transparent windows, holograms, colour-shifting elements and other anti-counterfeiting measures that are more difficult to replicate than traditional paper currency.The RBI's data has shown a rise in fake high-denomination notes detected in recent years, particularly Rs 500 notes. Countries that have adopted polymer currency have generally reported lower levels of successful counterfeiting.Australia, which fully switched to polymer notes by the mid-1990s, says its latest generation of notes includes multiple advanced security features that make them extremely difficult to counterfeit.How long till India carries polymer notesThe latest development comes weeks after Reserve Bank of India Governor Sanjay Malhotra said the central bank was examining the possibility of introducing polymer banknotes.Addressing the media after the Monetary Policy Committee (MPC) meeting, Malhotra said, "Polymer note is under consideration. We are examining the pros and cons. It is at a preliminary stage."Apart from discussing inflation, interest rates, global uncertainties and the impact of the Middle East conflict on commodity prices, the RBI governor also spoke about the possibility of introducing a new generation of currency notes made from polymer instead of traditional cotton-based paper.The MPC unanimously decided to keep the repo rate unchanged at 5.25% and retained its neutral policy stance, citing global uncertainties, geopolitical tensions in the Middle East and inflation concerns.In discussion for yearsThe idea of introducing polymer currency in India is not new.The RBI first proposed polymer banknotes in 2007 and later announced pilot projects for Rs 10 polymer notes in Jaipur, Shimla, Bhubaneswar, Mysuru and Kochi.Over the years, several tenders and feasibility studies were undertaken, but the proposal remained at the planning stage.In 2016, the government informed Parliament that the process of procuring polymer notes had been initiated, although no nationwide rollout followed.More recently, the RBI has also experimented with varnished notes, traditional paper banknotes coated with a protective polymer layer to improve durability.Get the latest Business News and Live updates. 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