RBI governor D Subbarao said they would withdraw the Rs 10 note depending on the demands, justy as it did with Rs 5 notes. However, it said the trouble is that banks don't prefer coins, saying they are yet to win the customer's preference. He said there is a shortage of capacity in the mint and that lower denomination coins are the top bank's priority. The RBI governor reminded that a similar situation was witnessed in the early 1990s at the time of withdrawing Re 1 notes.
The RBI's preference for coins is related to the cost of production and life span of a note. RBI deputy governor K C Chakrabarty said they prefer coins fro lower denominations for notes have a shorter life span and also their cost of production is higher.
The RBI governor said that the central bank was considering to introduce plastic money to replace paper money and will launch polymer notes on a pilot basis. It was learnt that an effort to introduce plastic money had been made a decade ago but it did not work. The RBI authorities were hoping that it would work this time around for the people's outlook had changed and the technology to make such notes had also improved.
There are Rs 10 coins worth Rs 76 crore in circulation currently and the central bank has plans to shift the enomination to coins. Chakrabarty said it was only a question of time before Rs 10 notes were completely withdrawn from circulation. "We can't have both coins and notes of the same denomination." he said.
On the replacement of Re 1 and Rs 2 notes, the RBI said the average life of those notes was just a year while their cost of printing and servicing did not justify it economically. Hence the printing of these notes were stopped and they were replaced with coins.