As per government estimates, 20% of all existing currency notes gets soiled or scribbled in India, which amounts to huge losses amounting to approximate Rs 2 lakh crore every year. In a decision which can have long lasting impact on the overall currency usage and its loss in India, RBI has announced that plastic notes will be introduced by 2015.
RBI notified regarding this policy while sharing its Annual Report for 2013-14. In that report, for the first time in history, RBI has introduced a separate section detailing it’s future plans for the next 12 months.
This official notification regarding plastic notes confirms RBI governor Raghuram Rajan’s statement which he gave in May in Shimla during a Board meeting: “Plastic notes are coming… Tender bids have come for 1 billion notes. In five cities, pilot testing would be done, including Shimla,”
As per the initial details, RBI has chosen 5 cities with different weather conditions and the plastic notes would be circulated there on a pilot basis. These cities are: Kochi, Mysore, Jaipur, Bhubaneswar and Shimla. Once enough real time data and feedback is generated, the same will be implemented all over India.
Will Plastic Currency Help?
Certainly! Plastic currency is now slowly becoming the norm across the globe as more and more developed countries are opting for plastic compared to paper as there are several inherent advantages.
These are stain proof, and cannot be destroyed easily. In addition to that, it will also help in counterfeiting of currency as cloning a plastic note becomes tough.
RBI Steps Up Effort To Save Currencies
Earlier, RBI had decided to stop fake currency market by expiring all pre-2005 currency notes. Such steps would not be necessary once plastic currency comes into existence. To get rid of scribbled and soiled notes, RBI has offered to exchange all such notes from banks; and even made writing on notes as a punishable offense.
In addition to plastic notes, RBI will also ‘harness technological advancements’ to protect currencies in India. For example, storage, transport and distribution of currency notes will be modified and a fully functional automated cash processing system will be implemented on a pilot basis. Besides, new series of bank notes will be introduced, which cannot be forged by counterfeiters.
You can find RBI’s Annual Report for 2013-14 and the currency notification here.