The Reserve Bank of India’s (RBI) plan to introduce polymer notes will entail significant costs because cassettes that hold cash in ATMs will have to be replaced, a senior official at a large state-owned bank said on Tuesday.
The banker said that polymer notes cannot be put in current automated teller machines (ATMs) without replacing the cassettes. These would mean an additional expense for banks, although lenders are yet to assess how much they will spend on this.
The banker, who spoke on condition of anonymity, said the cost of replacing an ATM is about ₹2 lakh and that of changing the cassettes will be lower.
“As far as we know, there are no companies in India that produce these cassettes and therefore there has to be a discussion on sourcing,” the banker said.
Cassettes are cases that store different denominations of currency notes in an ATM. Every ATM has separate cassettes for each denomination.
“Polymer notes are going to save a lot of cost in the long run but there is a huge cost in the initial adoption phase. When currency sizes changed in the past, banks have taken about a year to replace cassettes at ATMs to be able to dispense those,” the banker said.
The RBI is testing polymer banknotes in Indian conditions with the aim of rolling them out by 2027-28, governor Sanjay Malhotra said on 5 August.
“This is still a pilot. We will test and check how they perform in Indian conditions, climate and other infrastructure that we have put in place. And it is only thereafter that we will see if we need to further scale it up, as it is or with changes,” Malhotra said while announcing the monetary policy.
If everything goes according to plan, he said, the RBI is targeting a rollout at the beginning of the next fiscal year.
ATMs still in use
Even as Unified Payments Interface (UPI) remains ubiquitous, Indians have not sidelined ATMs. On average, customers withdrew ₹5,835 every month from ATMs in 2025 as against ₹5,586 in 2024, according to data from ATM solutions company CMS Info Systems.
Polymer banknotes can incorporate advanced security features such as see-through windows, micro-optic holograms and specialized inks, making them harder to counterfeit. About 60 countries including Australia, Canada, the UK, New Zealand, Singapore, Vietnam, Malaysia, and Mexico use polymer banknotes.
On 17 July, the RBI’s currency management arm, Bharatiya Reserve Bank Note Mudran, issued a global expression of interest inviting bids from manufacturers to supply polymer substrate sheets embedded with security features that may be used to print Indian banknotes at its own presses as well as those of Security Printing and Minting Corporation of India. The bidding window is open until 18 August.