Friday, October 22, 2010

Reserve Bank of India to issue ₹10 (10-rupee) polymer notes

While Googling around for news on the Rupee, I found some interesting articles about how the Reserve Bank of India (RBI) has been trying to improve the production and distribution of currency. I was surprised to learn that a note only stays in circulation in India for 6 months before it is so dirty, torn or crumbling that it gets turned in to a bank for a replacement with a fresh one. We've all noticed that in the past few years, the number of such mutilated dirty notes that we handle has gone down drastically — none of the notes in the my wallet strikingly enough are in so much as a creased state which was unheard of a few years ago. I used to put this down to luck, but was enlightened by this article about the RBI's Clean Note drive that puts this down to active effort by the RBI than random chance. It also talks about how the coin situation has been drastically improved. In the past, coins used to be Holy Grail material. People would hoard them and would be loathe to part with them. Transactions would end up abandoned because neither party was willing to part with their much-prized 50p, ₹1, or ₹2 coins. While the tendency to hold suspect anyone who hands out a whole amount note expecting coin change in return, as having nefarious designs to finnagle coins out of you is still there due to the history of our experience with the dearth of coins in circulation, it is disappearing due to the abundance of these coins these days, again due to the drive mentioned above which has dramatically improved production capacity. As part of this drive, the lifetime of a banknote has also been extended as banks have been prohibited from stapling notes which they used to do with abandon earlier, leading to mutilated notes being put into circulation right at the bank.

Also interesting and the reason for this post, is that the RBI is expected to issue 100 crore ₹10 (Rs.10) polymer or plastic banknotes by the end of the year (another article about this). These notes have loads of top-of-the-line security features such as the see-through plastic feature seen on Australian notes which is nearly impossible to counterfeit, have much higher durability (RBI estimates a polymer note to last in the Indian market for 5 years as opposed to the 6 months a paper note does), can be washed and are very difficult to tear or otherwise mutilate. It is expected to save the Exchequer ₹580 cr (Rs. 580 cr) per year in production and distribution costs due to the frequent need to replace paper notes. I understand that the polymer technology would need to be licensed from the Reserve Bank of Australia which was the first central bank to introduce and fully convert to polymer notes in order to beat counterfeiters. While there are definitely problems seen in countries like Thailand and Mexico with the print on polymer notes fading in a couple of years, sticky notes being difficult to handle and so on, I'm still looking forward to the ₹10 issue - it's great technology, clean washable notes in my wallet will be a plus, I'm curious to see the design for these new notes, and I wonder how Indians will react to them.

1 comment:

  1. Wow! I never know about anything like this.. thanks a lot for sharing this information..

    Indian bank notes