India will have plastic currency notes in circulation by early next financial year. 

RBI Governor Sanjay Malhotra said Wednesday the central bank is targeting to launch long-lasting polymer banknotes at the beginning of FY28 after completing field trials.

The Reserve Bank of India (RBI) plans to introduce polymer notes in the Rs 10 and Rs 20 denominations on a trial basis after receiving the government's approval.

The pilot run is on and it will test how these notes can perform in Indian conditions.

Polymer notes are more durable than conventional paper currency. "Polymer notes enhance durability and life. They are relevant for lower denominations because of their higher velocity of circulation, and therefore their lifespan is lower," Malhotra said.

“These notes have been in circulation for more than 30 years in various countries. And one finds that the life is much more, 3-4 times the life of the paper substrate. And then it also expands our capacity as…the needs of the economy increase,” he added.

Polymer notes will, however, not replace existing paper currency. The two will co-exist in circulation.

Australia was the first country to introduce polymer banknotes in 1988. Since then, around 60 countries have started using polymer currency, including the United Kingdom, Canada, New Zealand, Singapore, Malaysia, Thailand and Vietnam.

Last month, the government cleared the RBI's proposal to introduce one billion pieces each of Rs 10 and Rs 20 polymer notes for field trials. Regular issuance will be considered if the trials are successful.

On 17 July, Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), RBI’s currency management arm, floated a tender from manufacturers to supply polymer substrate sheets                              required to print the trial banknotes.