Daijiworld Media Network - New Delhi

New Delhi, Aug 11: The government has approved a proposal to introduce one billion polymer banknotes each in Rs 10 and Rs 20 denominations for field trials, Parliament was informed on Tuesday.

In a written reply to the Rajya Sabha, Finance Minister Nirmala Sitharaman said the Reserve Bank of India (RBI), based on a recommendation of its central board, had submitted the proposal to the government under Section 25 of the RBI Act, 1934.

The proposal also envisages regular issuance of polymer banknotes in the two denominations if the field trials prove successful.

“The proposal has been approved by the government. As per the RBI, these polymer banknotes are proposed to be issued along with paper substrate-based banknotes,” Sitharaman said.

She added that the RBI had informed the government that the procurement process is currently at an initial stage.

As a result, the timeline for introduction of the polymer notes and the expenditure involved cannot yet be determined, the minister said.

Earlier this month, RBI Governor Sanjay Malhotra said the central bank was targeting the launch of polymer currency notes at the beginning of the next financial year.

Speaking at the post-Monetary Policy Committee (MPC) outcome media briefing, Malhotra said the pilot programme for polymer banknotes was still underway.

“There is still a pilot going on for polymer notes,” the RBI Governor said, adding, “We will test the currency before bringing it to the market.”

Malhotra also indicated that the RBI would evaluate the results of the field trials before taking a final decision on wider circulation.

The RBI Governor has said the central bank is targeting circulation of polymer banknotes by FY28.