The Reserve Bank of India has been authorised to conduct trials of plastic Rs 10 notes in five cities, the government told Lok Sabha on Friday. “Approval for procurement of plastic substrate and printing of bank notes of Rs 10 denomination on plastic banknote substrates has been conveyed to the RBI,” read a letter issued by Minister of State for Finance Arjun Ram Meghwal.
The minister said that the reason for the field trial was that polymer-based banknotes are believed to last longer than the cotton substrate based banknotes. Plastic notes are believed to be more difficult to counterfeit.
The RBI is likely to experiment with a billion Rs 10 plastic notes in Bhubaneshwar, Jaipur, Kochi, Mysore and Shimla. These cities have been selected for their geographical and climatic diversity.
The field trials have been in the works for a while. During the United Progressive Alliance regime in 2014, the government had informed the Parliament that one billion plastic Rs 10 notes would be introduced.
Australia was the first country to introduce plastic notes in 1988. Such notes are now in circulation in more than 20 countries.
This comes four months after Prime Minister Narendra Modi had announced the demonetisation of the Rs 500 and Rs 1,000 notes to fight corruption and black money. The Centre had later introduced new Rs 500 and Rs 2,000 notes. However, the existing Rs 10 paper notes may not be scrapped altogether. “There is no logic to demonetise Rs 10 notes. Instead, the new plastic notes could be circulated along with the paper bills,” a government official told Hindustan Times.
Besides, the government also said that it was the banks’ responsibility to prevent cases of fake notes. “The responsibility of ensuring the quality and genuineness of cash loaded at ATMs is that of the sponsor bank,” said junior finance minister Santosh Kumar Gangwar. His comments come in the backdrop of ATMs dispensing fake Rs 2,000 notes bearing a stamp of the “Children Bank of India” instead of the RBI. These cases were reported from Haryana and Delhi.