The government has approved a proposal to introduce one billion polymer banknotes each in Rs 10 and Rs 20 denominations for field trials, Parliament was informed on Tuesday. The Reserve Bank of India, on the recommendation of its central board, had submitted the proposal to the government under Section 25 of the Reserve Bank of India Act, 1934, Finance Minister Nirmala Sitharaman said in a written reply to the Rajya Sabha.
The proposal also provides for regular issuance of polymer banknotes in the two denominations if the field trials are completed successfully. "The proposal has been approved by the government. As per the RBI, these polymer banknotes are proposed to be issued along with paper substrate-based banknotes," the minister said.
The RBI has informed the government that the procurement process is currently at an initial stage.
As a result, it is not yet possible to determine the exact timeline for the introduction of polymer banknotes or the expenditure likely to be incurred, the minister said.
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RBI Governor Confirms Launch Of Polymer Currency Notes
Early this month, Governor Sanjay Malhotra said the Reserve Bank of India is targeting to launch long-lasting polymer currency notes at the beginning of the next financial year.
Speaking to reporters at the customary briefing after the monetary policy review, Malhotra said the polymer currency notes have lasted for over 30 years in some jurisdictions and will come in handy, especially for the lower denomination notes which have high velocity.
Malhotra said the next move of the Reserve Bank of India (RBI) on the crucial aspect of interest rates and also the stance of the policy will be data-dependent, and underlined that the prime focus of the central bank is to align the headline inflation with its target of 4 per cent over the medium term.
Commenting on the Foreign Currency Non-Resident (Bank) scheme, Malhotra said the flows have been "robust", and the RBI expects healthy movement of funds going forward till the closure of the limited-period scheme.
When asked if the central bank is looking to close the scheme prematurely, given that there is a cost which the RBI is committed to bear for the fund inflows, Malhotra said there is no such proposal at this point of time.
After being pointed out that the rupee has not appreciated as intended despite the high flows from foreign shores, Malhotra said a further strengthening in the rupee is possible if geopolitical tensions de-escalate.
ALSO READ: RBI Governor Says Polymer Currency Notes Likely To Be Launched By FY28
(with inputs from PTI)
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