RBI urged to switchover from paper to plastic currency notes

Amiti Sen

Indian Express Newspapers (Bombay) Ltd.

New Delhi

09.07.00

The domestic plastic manufacturers have urged the Reserve Bank of India (RBI) to consider the option of switching over from paper to plastic currency notes as has been successfully done by Australia. Several other countries are also following Australia's example with the United States being the latest to join the bandwagon.

Manufacturers say that replacing paper notes with plastic ones will not only be a move towards more hygienic and durable currency bills but will also translate into more business for the domestic polymer industry.

Speaking to The Financial Express, executive committee member of Indian Centre for Plastics and Environment OP Ratra said that plastic currency notes had several advantages over paper notes. As paper notes are cellulosic in nature they develop microbes when they get soiled and thus can be a cause of diseases. Moreover, they get mutilated with time and have to be destroyed. "The RBI destroys thousands of currency notes every day".

Plastic notes, on the other hand, are non-cellulosic in nature and thus cannot lead to the growth of microbes. If they become dirty they can simply be wiped or washed. "There is no danger of the notes getting destroyed by water," Ratra said. He added that the notes are more durable than paper ones and do not get mutilated easily. The RBI will thus not face the problem of replacing the notes at regular intervals.

Another factor which goes in favour of plastic is the fact that it is very difficult to produce counterfeit plastic notes. "In India the problem of counterfeit notes is increasing by the day. Plastic notes will help check the problem."

Manufacturers say that it will not be difficult for India to produce the plastic notes as the plastic required for the production is available in plenty in the country. The polymer required for the manufacture of plastic notes is bi-axially oriented poly proplene (BOPP), which is produced and exported by a number of companies including Reliance, IPCL and Haldia Petrochem. "India has both material and film technology for the production of plastic notes. The RBI will only have to import printing technology for the purpose," Ratra said.

Australia was the first country to go in for plastic notes way back in 1988. According to reports, the country finished converting all its currency notes into plastic in 1996. Other countries that have followed Australia's example and have introduced plastic currency notes include Brazil, Sri Lanka, Romania, New Zealand, and Northern Ireland.

The United States has also run a test trial and is expected to introduce plastic notes in its economy soon. If the RBI exercises the option of going in for plastic notes, it will also give a boost to the domestic polymer industry. Domestic demand for the polymer BOPP will go up thus giving manufacturers an opportunity to earn more revenue.