3 weeks ago
RBI targets polymer currency notes launch next financial year
The Reserve Bank of India, the country's central bank, wants to make new money that lasts a long time.
This money is called polymer currency notes, and they are made of a special kind of plastic.
The RBI Governor, Sanjay Malhotra, told reporters that these notes should be in use at the start of the next financial year.
In some other countries, polymer notes have lasted for more than 30 years.
They are especially useful for smaller notes that get used a lot.
The RBI also said it will decide about interest rates based on new information.
It wants to keep prices stable so that inflation reaches its target of 4 per cent.
The RBI is also happy with the money coming in through the FCNR(B) scheme for non-residents.
The Indian rupee might get stronger if tensions between countries go down.
The RBI wants the rupee to move in a smooth and orderly way.
RBI Governor Sanjay Malhotra said the central bank is targeting to launch long-lasting polymer currency notes at the beginning of the next financial year.
Polymer notes have lasted for over 30 years in some jurisdictions and suit lower denomination notes with high velocity.
Malhotra said the next move on interest rates and policy stance will be data-dependent, with headline inflation alignment to the 4 per cent target as the prime focus.
Flows under the FCNR(B) scheme have been 'robust', and the RBI has no proposal to close the limited-period scheme prematurely.
Malhotra said further rupee strengthening is possible if geopolitical tensions de-escalate, with an orderly trajectory for the rupee as the RBI's endeavour.
- Who
- RBI Governor Sanjay Malhotra
- What
- Announced the RBI's target to launch long-lasting polymer currency notes at the beginning of the next financial year, alongside comments on interest rates, inflation, FCNR(B) flows and the rupee
- Where
- Mumbai
- When
- Wednesday, at the customary briefing after the monetary policy review
- Why
- Polymer notes last over 30 years in some jurisdictions and suit high-velocity lower denomination notes; the RBI also aims to align headline inflation with its 4 per cent target over the medium term
Market observers
Reserve Bank of India
Rupee response to foreign inflows
Market observers
Despite robust foreign currency inflows, the rupee has not appreciated as intended, suggesting the expected impact has not materialised.
Reserve Bank of India
A further strengthening in the rupee is possible if geopolitical tensions de-escalate, and the RBI's endeavour is to keep the rupee's trajectory orderly.
FCNR(B) scheme cost and closure
Market observers
The RBI bears a cost for the fund inflows under the limited-period FCNR(B) scheme, raising questions over whether it may close the scheme prematurely.
Reserve Bank of India
The RBI sees robust flows and expects healthy movement of funds until the scheme's scheduled closure, and has no proposal to close it early.
Key facts
- Announcement
- Targeted launch of polymer currency notes at the beginning of the next financial year
- Announced by
- RBI Governor Sanjay Malhotra
- Location
- Mumbai, post-monetary policy review briefing
- Durability
- Polymer notes have lasted over 30 years in some jurisdictions
- Inflation target
- 4 per cent over the medium term
- FCNR(B) scheme
- Flows described as 'robust'; no proposal for premature closure
- Rupee outlook
- Further strengthening possible if geopolitical tensions de-escalate
Quotes
Sanjay Malhotra
Governor of the Reserve Bank of India
“We are targeting that they are in circulation, if everything goes as per plan, in the beginning of the next financial year.”
thehansindia.com
“There is no such proposal at this point of time.”
thehansindia.com
Sources
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