New Delhi: Days of soiled, washed, partially torn and mutilated bank notes are numbered.
By the year end, the Reserve Bank of India will come out with polymer (plastic) bank notes of Rs 10 denomination and would follow it up with plastic notes of other denominations.
RBI is gearing up to issue polymer notes by the end of this year after witnessing the condition of paper-based currency notes and the cost attached to such bank notes.
"We plan to circulate polymer notes of Rs 10 denomination within the current year. We will start with Rs 10 notes on an experiment basis and then based on it Rs 20 and Rs 50 notes would be issued," said an RBI source.
Polymer notes are already in circulation in various countries such as New Zealand, Sri Lanka, Malaysia and Hong Kong. These countries also have additional capacity to produce plastic notes, said the official.
"RBI could have imported the plastic notes from these countries but after some consideration we have decided to produce them within the country," he added.
It may be noted, Australia was the first country to issue polymer notes.
Currency notes of Rs 10 denomination are in maximum circulation in the country and its production cost is also more compared to notes of other denominations.
As paper notes start looking old quite early, the central bank felt the need for notes that have longer durability and can be kept clean. RBI sees a solution in polymer notes.
"We are heading towards plastic notes of Rs 10 as the paper-based notes entail a higher cost. Beside, paper notes get damaged soon during humid weather," he said.
On the issue of fake notes, he said that though there is no case of fake notes in Rs 10 denomination, the plastic notes will have enough safety features.
RBI is not likely to issue plastic notes of Rs 5 denomination as it is focusing more on its coins. Further, RBI is trying to increase the production of Rs 5 coins to meet the shortage in the market, he said.