RBI Examining Proposal for Polymer Banknotes, Says Governor Sanjay Malhotra

The Reserve Bank of India (RBI) is evaluating a proposal to introduce polymer banknotes, with Governor Sanjay Malhotra confirming that the idea is currently under consideration. Speaking during a post-monetary policy media interaction on Friday, Malhotra said recent reports about the RBI exploring polymer notes were partly accurate. However, he clarified that the proposal remains at a preliminary stage, with the central bank assessing its potential benefits and drawbacks before taking any decision.

At present, Indian banknotes are printed on paper made from 100 per cent cotton. Malhotra noted that the RBI is carefully studying whether polymer notes would be a worthwhile alternative. The discussion comes as the RBI’s latest annual report highlighted the continued popularity of cash among households and small retailers. A survey conducted by the central bank found a strong preference for cash payments despite the rapid growth of digital transactions, a trend reflected in the robust increase in banknotes in circulation during FY26.

According to the RBI, the value of banknotes in circulation rose 11.9 per cent year-on-year to ₹41.23 trillion by March 2026, while the volume increased 10.5 per cent to 171.32 billion notes. The ₹500 denomination accounted for 85.5 per cent of the total value of notes in circulation. India had previously explored polymer currency, with the government approving a field trial of one billion ₹10 polymer notes in five cities in 2012. That initiative, aimed at extending the lifespan of banknotes rather than tackling counterfeiting, was eventually shelved due to technological challenges.

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