India Rejects Polymer Banknotes

Introduction of polymer 10 Rupee banknotes has been postponed due to unforeseen technical difficulties, said Mr. Chakrabarty, Deputy Governor of the Reserve Bank of India (RBI). He noted that the quality of low Indian denominations, especially the 10 Rupee, still causes concerns, including due to the troubles some Indian commercial banks experience in unfit note withdrawal.

As a result of its annual report for 2012-2013, RBI said it had resolved to issue 1b polymer 10 Rupee notes for operational tests in 5 cities: Jaipur, Bhubaneshwar, Kochi, Shimla, and Mysore chosen due to their location and climate.

RBI experts once concluded that polymer banknotes are more beneficial because they can last longer in circulation. They're also believed to be well protected, hence difficult to forge.

The global growth of cash in circulation in relation to GDP is about 2.5-8%, while in India the figure is 13% because most people here use only cash. As of late March 2013, the 10 Rupee notes accounted for about 34% of total banknotes in circulation and 2% of total banknote value.

To optimize the national cash cycle, RBI decided to outsource cash processing, storage, and transportation. CIT companies, urban and rural commercial banks may handle cash packing, sorting, and transit by themselves. This scheme needs improvement, but Mr. Chakrabarty said RBI hopes to achieve good results empirically.

Source: TheHinduBusinessLine.com news agency