Plastic Currency: Suitability, Life Cycle & Cost
Hargovind Sachdev
Currency notes are an essential part of everyday economic activity. In India, currency notes are made from 75% cotton and 25% linen, allowing them to withstand about 4,000 double folds before tearing. However, due to a large population, heavy cash usage, a humid climate, and frequent handling, notes often become soiled, torn, and unusable much sooner than their intended lifespan. As a result, RBI has decided to introduce plastic currency in the denominations of Rs.10 and Rs.20 from April 2027.
Polymer banknotes were first introduced by Australia in 1988 to commemorate the country’s bicentenary. The technology was developed through a collaboration involving Australia’s central bank. Developing this advanced banknote material required nearly two decades of research and development.
More than 40 countries now use polymer banknotes. The U.K., Canada, New Zealand, Singapore, and Romania have fully switched to polymer currency for its superior durability and security features.
In July 2026, the Government approved the RBI’s proposal for a large-scale field trial of 100 crore notes each of ₹10 polymer and ₹20 polymer notes, with a total pilot value of ₹3,000 crore.
The trial is intended to generate real-world data on durability, security, ATM performance, public acceptance, and behaviour under different climatic conditions.
The most significant advantage of polymer currency is durability. While conventional paper notes deteriorate quickly through repeated handling, folding, and exposure to moisture, polymer notes can typically last 2.5 to 4 times longer. They resist dirt, water, oils, and environmental damage much better than cotton-based notes.
This durability is particularly relevant for India, where lower denomination notes circulate intensively in daily transactions. Notes frequently pass through numerous hands, making them susceptible to damage. Longer-lasting banknotes would lead to significant operational efficiencies.
Polymer notes also offer superior cleanliness. Because the surface is non-absorbent, dirt and moisture do not penetrate as easily as they do with paper notes. This helps maintain the appearance and quality of currency throughout its life.
Another major benefit lies in enhanced security. Polymer notes can incorporate transparent windows and complex security features that are extremely difficult for counterfeiters to reproduce. Ordinary photocopiers and scanners cannot accurately replicate these transparent sections. Consequently, polymer notes strengthen protection against forgery and help maintain public confidence in the currency system.
Polymer notes survive four times longer than paper notes. A polymer note could replace several paper notes over the same period. Lower-denomination notes benefit the most because they experience the highest circulation volume.
Extended shelf life translates directly into economic savings. Since fewer notes need to be printed, transported, stored, and destroyed, central banks can reduce operational expenses while maintaining an adequate currency supply.
Although polymer notes are made from plastic-based materials, they can offer environmental advantages when examined over their entire life cycle.
Traditional paper-based currency requires cotton production, which consumes significant quantities of water and often involves pesticides and chemical treatments. Since polymer notes last substantially longer, fewer replacement notes are needed over time. This reduces demand for raw materials and lowers overall manufacturing requirements.
The Bank of England has reported that its polymer £5 note has a carbon footprint approximately 16% lower than the equivalent paper note. The reduction stems largely from its longer lifespan and lower replacement frequency.
For India, where billions of notes circulate annually, extending the life of banknotes could significantly reduce resource consumption, transportation emissions, and waste generation.
Despite their advantages, polymer notes present certain technical challenges. One of the most important concerns is compatibility with existing ATM infrastructure.
Polymer notes are smoother and more slippery than traditional paper notes. ATM dispensing mechanisms rely on rollers that grip and separate notes during withdrawal transactions. The lower friction of polymer notes can make this process less reliable, increasing the risk of dispensing errors.
The experience of the United Kingdom highlights the scale of the challenge. Following its transition to polymer currency, the UK spent more than £45 million upgrading cash vending machines. When cash-counting machines were included, the total expenditure reached £240 million, equivalent to ₹4,300 crore.
India’s ATM network is considerably larger, and plans to increase the circulation of smaller denomination notes could increase infrastructure upgrade requirements.
Plastic notes entail substantial upfront costs because they require specialised substrates produced by a small number of global companies. India would rely on imported substrates and invest in redesigning notes, modifying printing processes, and upgrading ATM and cash-handling infrastructure.
India currently spends ₹ 4,000 crore annually printing replacement banknotes. One of the most debated questions surrounding polymer notes is whether they are economically worthwhile.
Polymer currency notes represent an attractive option for improving the environmental sustainability of India’s banknote system. Their considerably longer lifespan can reduce replacement frequency, lower long-term printing costs, decrease environmental impact, and enhance counterfeit resistance through advanced security features.
No country using polymer currency operates on the same population and circulation scale as India. Therefore, the RBI’s polymer-note experiments are among the most ambitious currency-material trials attempted anywhere because India has one of the world’s largest cash circulation systems.
A note that works successfully in Australia, Canada, or the UK must still prove itself in a country where billions of low-value notes circulate intensively every day.
Mr Hargovind Sachdev superannuated as a General Manager of State Bak of India. Has over 39 years of experience across State Bank of Travancore, State Bank of India, State Bank of Patiala, UCO Bank and United Bank of India. He headed the Central European Credit Desk of State Bank of India a Frankfurt, Germany from 2006 to 2011 covering 15 countries and was the CVO of UCO Bank & United Bank of India till 2016. Ex-General Manager, State Bank of India, Former CVO, UCO Bank & United Bank of India.
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