RBI tidy up plastic ticket plan
The Reserve Bank of India (RBI) appears to have shelved its plan to roll out plastic banknotes due to concerns about the banknotes’ ability to withstand India’s climatic conditions, which are characterized by high temperatures.
Additionally, with the leaps and bounds of Unified Payment Interface (UPI)-based transactions and the planned launch of Central Bank Digital Currency (CBDC) in FY23, the need for introducing plastic banknotes has decreased.
According to RBI’s 2015-2016 Annual Report, 1 billion banknotes worth ₹10 were to be printed on all available plastic (polymer) substrates and released to the public in five cities with different climatic zones – Kochi , Mysuru, Shimla, Jaipur and Bhubaneswar on a trial basis.
Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) and Security Printing and Minting Corporation of India Limited (SPMCIL) took over this project.
But little progress could be made in this regard for reasons such as the possibility that plastic banknotes react to high temperatures and catch fire and that UPI-based transactions are gaining ground.
While polymer banknotes have a long lifespan, weigh less and are waterproof compared to paper banknotes, bankers point out that once the former react to high temperatures, it can be difficult to make them. to exchange.
However, soiled and mutilated paper banknotes can be easily exchanged between the Bank and RBI counters.
UPI based transactions
According to RBI data, UPI-based transaction volume soared 100.50% year-on-year (YOY) to reach 46,171.56 lakh in January 2022 (23,027, 28 lakh in January 2021), with transaction value surging by around 93% to reach ₹8,31,993 crore in January 2022 (₹4,31,182 crore in January 2021).
In a July 2021 speech, RBI Deputy Governor T Rabi Sankar had observed that “A CBDC is the legal tender issued by a central bank in digital form. It is the same as a fiat currency and is exchangeable on a one-to-one basis with fiat currency. Only its shape is different.
“…The introduction of the CBDC has the potential to provide significant benefits, such as reduced reliance on silver, higher seigniorage due to lower transaction costs, reduced settlement risk.”
Sankar noted that the introduction of the CBDC will perhaps lead to a more robust, efficient, reliable, regulated, and legal tender-based payment option.
“There are undoubtedly associated risks, but they must be carefully weighed against the potential benefits. It would be RBI’s effort, as we move towards India’s CBDC, to take the necessary steps that would reaffirm India’s leadership position in payment systems,” he said.
Ordinary users: mixed reactions
A June 2016 article by IMF communications officer Ping Wang captured mixed reactions from ordinary users to the laminated feel of polymer banknotes.
According to the article, Zoë Martin, a tutor in Toronto, Canada, said, “They stick together because of static, they don’t bend well like paper bills when new, and they are slippery. then they slip out of your pocket.
But Michael Brienza, a daycare teacher from Toronto, said: “I prefer them; they are so much cleaner. Paper invoices have become dirty.
“The fact that they are waterproof means that getting them wet will cost you nothing.
“True story: My sister once found one of Canada’s new $100 bills while scuba diving in the tropics. Who knows how long he sat on that reef? quoted Wang.
April 15, 2022