In order to stop damaged currency from further circulation, the Reserve Bank of India has instructed all the bank branches to install note-sorting machine. The step will discourage the further circulation of the unfit currency.
Governor of Central Bank Mr. D Subbarao said "The Reserve Bank is committed to a 'clean note' policy. RBI exchanges soiled notes for clean ones, and mutilated notes for new ones subject to certain conditions."
He also said "In pursuit of our clean note policy and to check counterfeiting, we also prescribed that by March 31, 2011, all bank branches with cash receipts of over Rs 50 lakhs per day be equipped with a note sorting machine so that every high denomination currency note is checked for fitness and genuineness before being put back in circulation."
Speaking about the plastic currency, he said that at first they are planning to launch it on pilot basis. Initially the bank will issue plastic notes in the Rs. 10 denominations. During this phase bank will monitor various factors including the cost and the disposal of the plastic currency. The further implementation will depend on the outcome.
Plastic currency is already in use in countries like Australia and Singapore.
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