On 8 November 2016, Prime Minister Narendra Modi announced the withdrawal of Rs 500 and Rs 1,000 notes. During his address to the nation, he brought up the issue of fake currency multiple times, and asserted how demonetisation was aimed at fighting fake currency, among other things.
Even the Finance Ministry, in its press release on the same day, spoke about the menace of fake currency and said that demonetisation was a step to counter it.
But more than eight months after demonetisation, the government does not seem to have detected a large volume of fake currency notes if one goes by the information shared by it in the Lok Sabha and the Rajya Sabha on the issue.
Not a Large Volume of Fake Currency Detected Post Demonetisation
In response to a question in the Lok Sabha, the government mentioned that according to the data available with National Crime Records Bureau (NCRB), a total of 1,57,818 Fake Indian Currency Notes (FICN) having a face-value of Rs11,24,04,980 have been reported by states/Union Territories (UTs) police for the period between 9 November 2016 and 14 July 2017.
In response to a similar question in the Rajya Sabha, the government mentioned that according to the information available with the NCRB, a total of 1,57,797 Fake Indian Currency Notes (FICN), having a face-value of Rs 11,23,62,980 have been detected in 29 states post demonetisation until 14 July 2017.
Responding to another question in the Rajya Sabha, the government mentioned that a total of 89,691 Fake Indian Currency Notes (FICN) of Rs 1,000 and Rs 500, having a face-value of Rs 6,86,95,500 have been reported by States/UTs police in the year 2017 till 30 June.
This basically implies that only 1.57 lakh counterfeit notes with a face-value of only about Rs 4.36 crore was detected in the two months following demonetisation (November and December of 2016). Compared to the value of demonetised currency (15.44 lakh crore), the amount of fake currency detected is minuscule.
Number of Counterfeit Notes Detected Post Demonetisation Lesser Than Previous Years
Interestingly, if you compare to previous years, there were actually fewer number of counterfeit notes that were detected in the eight months after demonetisation.
In 2014-15, a total of 5.94 lakh counterfeit notes were detected as per RBI’s annual report. In 2015-16, this number went up to 6.32 lakh. But in the eight-month period between 9 November 2016 and 14 July 2017, only 1.57 lakh counterfeit notes were detected.
Now that we have assessed the numbers, here’s an explanation of who can impound fake currency and how.
Who Can Impound Fake Currency?
The Reserve Bank of India (RBI) has issued instructions on multiple occasions regarding the process to be followed when fake currency is detected by the banks. The following authorities can impound counterfeit notes:
- All banks
- All Treasuries and Sub-Treasuries
- Issue Offices of Reserve Bank of India
All notes received over the counter or directly at the back office will be examined for authenticity through machines.
RBI’s instructions make it clear that no credit will be given to the customer’s account if counterfeit notes are received from the customer. The instructions also make it clear that such notes should not be returned to the customer and also cannot be destroyed by the bank. Banks and other authorities have to compulsorily impound counterfeit notes detected by them. Failure to do so will also make them liable for penalty.
What Happens to the Impounded Fake Currency?
Whenever a currency note is found to be fake or counterfeit, an acknowledgement receipt in the following format should be issued to the person who tendered those notes.
In cases where up to four pieces of counterfeit notes are detected in a single transaction, a consolidated report in the following format should be sent by the Nodal Bank Officer to the police authorities along with the counterfeit notes at the end of the month.
In cases where five or more pieces of counterfeit notes are detected in a single transaction, the counterfeit notes should be forwarded by the Nodal Bank Officer to the local police authorities in the following format:
Every month, a consolidated report/FIR should be sent by police to the Forged Note Vigilance Cell at the head office of each bank.
(This article has been published in an arrangement with Factly)
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