Why in News?
The Reserve Bank of India (RBI) is set to begin field trials of polymer (plastic) currency notes, nearly 15 years after an earlier pilot was proposed but not implemented. An RBI subsidiary has invited bids to procure polymer sheets for printing trial notes.
Why Polymer Notes?
- More durable: Last 2 to 6 times longer than cotton-based paper notes.
- Lower long-term costs: Fewer notes need to be printed, transported, and destroyed.
- Environment-friendly: Worn-out polymer notes can be recycled into plastic products.
- Better security: More resistant to counterfeiting due to advanced security features.
India’s Earlier Attempt
- In 2009, RBI proposed a pilot of ₹10 polymer notes.
- Field trials were planned in Kochi, Mysuru, Shimla, Jaipur, and Bhubaneswar.
- The project was shelved after technical issues were identified during evaluation.
Global Adoption
- First introduced by Australia (1988).
- Used in 50+ countries, including the UK, Canada, New Zealand, Singapore, Malaysia, Thailand, and Vietnam.
Challenges
- India may initially need to import polymer sheets, creating import dependence.
- Transition requires fresh investment despite existing domestic facilities for banknote paper and security ink.
- RBI is therefore expected to adopt a gradual transition.
Prelims Value Added
- Indian currency notes are currently made from 100% cotton-based paper.
- Bharatiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL) is a wholly owned subsidiary of the Reserve Bank of India that prints banknotes.
- Bank Note Paper Mill India Pvt. Ltd. (BNPMIPL) manufactures banknote paper domestically.
- Security Printing and Minting Corporation of India Ltd. (SPMCIL) prints banknotes, mints coins, and produces security documents.
[2025] Which of the following are the sources of income for the Reserve Bank of India?
I. Buying and selling Government bonds
II. Buying and selling foreign currency
III. Pension fund management
IV. Lending to private companies
V. Printing and distributing currency notes
Select the correct answer using the code given below.
[A] I and II only
[B] II, III and IV
[C] I, III, IV and V
[D] I, II and V