Mumbai, May 29 (PTI) To make banknote disposal more environment-friendly, the Reserve Bank will use shredded banknotes for making particle boards and has started a process to empanel board manufacturers, according to its annual report released on Thursday.

In its report, the RBI said the quantum of banknote briquettes or compressed blocks of paper produced annually in India has hovered around 15,000 tonnes, and it has been on the lookout for greener alternatives for disposal.

Conventionally, a majority of central banks and other authorities in charge of currency management dispose of shredded banknotes in landfills or through incineration, which is not environmentally friendly.

The RBI commissioned a study by the Institute of Wood Science and Technology, an autonomous body under the Union Ministry of Environment, Forest and Climate Change, to look for some alternative solutions, the report said.

"The study established that particle boards created with currency briquette particles would conform to the technical requirements of particle board," the annual report said.

It has initiated a process for empanelment of particle board manufacturers who will procure briquettes for end use as partial replacement of wood particles in their boards, the annual report said.

The Department of Currency Management will "actively pursue" its initiatives towards finding more environment-friendly ways for disposal of banknote shred/briquettes, it added.

The report said ingredients embedded in banknote paper substrate such as security threads and fibres, security inks and other chemicals used in banknote printing lead to an environmental impact, and hence the disposable has to be made more sustainable and eco-friendly. PTI AA MR BAL BAL

Currency disposal: shredded banknotes repurposed into particle boards, with empanelment of manufacturers and environmental compliance. The central banking authority will repurpose shredded banknotes and briquettes as a partial raw material in particle boards after a commissioned study confirmed technical suitability; it has initiated empanelment of particle board manufacturers to procure briquettes for use as a substitute for wood particles, while the currency management department will pursue greener disposal pathways and ensure environmental and technical compliance due to embedded security features and inks that cause environmental impact.