New Delhi, May 29 -- The Reserve Bank of India is considering the introduction of polymer banknotes into circulation, reviving a proposal first floated over a decade ago, as the cost of printing paper currency surges and billions of soiled notes continue to be pulled from circulation every year.

The central bank is expected to announce a pilot project in the near future, according to Business Standard, with the matter having been discussed at the RBI's last two board meetings, held in Patna and Mumbai. Lower denomination notes, particularly the Rs.10 and Rs.20, are likely to be tested first given how rapidly they wear out in everyday use.

Polymer banknotes are currency notes printed on a thin, flexible plastic substrate rather than the ...