Faced with increasing amount of forgeries and counterfeiting of currency notes with the introduction of colour photocopiers, Australia launched the world’s first polymer bank note on January 26, 1988. This effectively replaced cotton-paper based notes, resulting in savings on production costs and preventing counterfeiting.
Today, more than 30 countries have followed Australia’s lead by printing fibrous polymer substrate bank notes that lasts much longer than its predecessors. These notes have three levels of security devices that make counterfeiting very difficult. So far, there has been no reports of counterfeiting of polymer bank notes.
One of the important reasons for switching over to polymer currency notes, apart from the major issue of counterfeiting, is costs and longevity.
The paper-linen based notes, for example, have a 4-5-year life, depending on usage; paper notes have high wear-and-tear and cannot be recycled.
Every year, crores are spent in systematically destroying them. On the other hand, polymer notes last 10-12 years or more, and cannot be torn, do not wear out and can be recycled at minimal cost. Polymer notes, with their inherent advantages, can be a game changer in the Indian money market, in due course.
Many countries such as Indonesia, Thailand, Malaysia, New Zealand, Kuwait, Nepal, Bangladesh and Sri Lanka started with commemorative bank notes in polymer and later switched over to polymer notes to replace the paper-cotton notes.
In fact, the Reserve Bank of India had announced in September 2009that it would introduce one billion ₹10 notes in polymer.
This was followed by press reports that the RBI was conducting market research in select towns, and that trials were being held in Bhubaneshwar, Jaipur, Kochi, Mysuru and Shimla, based on climatic factors.
Regrettably, no further progress has been reported, and demonetisation has probably delayed it further. An important question is whether India can source adequate supply of raw materials and the know-how to introduce polymer currency notes.
The notes are made from polymers such as biaxially oriented polypropylene (BOPP), and its guaranteed supply is essential to introduce polymer notes on a large scale.
While several foreign entities such as De La Rue, DuPont, AGRA Vadeko, and Innovia Security provide solutions to print polymer notes, many countries have chosen to follow the Australian technology.
India, too, could tap into it to get started.
India will also need to start working on redesigning ATMs to accommodate the polymer notes, when introduced. Will India follow the US system of single-size bills or employ various sizes and colour combinations?
In any case, large-scale introduction of polymer notes has to be done in a phased manner, spread over 3-5 years, and by establishing several printing units in strategically and logistically located production centres.
It may be worthwhile consulting countries such as Australia, the UK and Canada, apart from several Asian countries, that by now have adequate experience in using polymer bank notes.
The writer has worked with the Engineering Export Promotion Council of the Ministry of Commerce