RBI plans varnishing to increase note life

Reserve Bank of India seems to have stopped pursuing the introduction of plastic notes which was one of the main agendas until last year.

Instead, it will come out with a varnished note. As a pilot the Central bank will varnish a few batches of Rs 100 notes.

"RBI will introduce varnished banknotes of Rs 100 denomination on a field trial basis in order to increase the life of Indian banknotes," the central bank said in its annual report.

"International experience suggests that varnishing of banknotes is expected to increase their life and durability, reduce the banknote replacement requirements and thereby lower the overall security printing expenditure," RBI said.

RBI disposed of 12,393 pieces of soiled currency notes in 2018-19, much lower than the 27,678 pieces of currency it discarded in the previous year. The value of banknotes in circulation in during 2018-19 increased by 17.0% to Rs 21.10 lakh crore, compared to last year. And the volume went up by 6.2 % to 108,759 million pieces.

"Once the old series banknotes are withdrawn from circulation, identification of the new series banknotes will automatically become easy for the visually impaired," RBI said in its annual report.

RBI is also pursuing to indigenisation of its banknotes, which is helping it cap its printing costs. The total expenditure incurred by RBI on printing currency notes between July 1, 2018, and June 30, 2019, was Rs 4,811crore, a shade lower to last year's Rs 4,912 crore.

Bhartiya Reserve Bank Note Mudran Private Ltd. (BRBNMPL) has set up an ink factory at Mysuru with an annual production capacity of 1,500 metric tonne, which has started its commercial production from August 2018.

Consequently, dry offset inks, Quickset Intaglio Inks (QSI), numbering inks and colour shifting inks used in the printing of banknotes are being manufactured at the Mysuru ink factory. "This is a significant milestone achieved in the long journey towards indigenisation," RBI said in the report.

In value terms, the share of Rs 500 and Rs 2,000 banknotes, which had together accounted for 80.2% of the total value of currency notes in circulation at end-March 2018, increased to 82.2% at end-March 2019.

Interestingly, the Rs 500 note is emerging as the most popular currency note in the country. There was an increase in the value of Rs 500 banknotes in circulation -- from 42% to 51% over the previous year.

Apart from these features, the RBI is also exploring alternative technological solutions to help the visually impaired in identifying currency note denominations.

The RBI has also set up a state-of-the-art Banknote Quality Assurance Laboratory in Mumbai, with the aim of upgrading and standardising currency notes. The laboratory will focus on standardising the quality of banknotes between all the different security presses that print currency notes.