Counterfeit currency: a new menace in India

It was business as usual. Retail vendor Santosh Kumar Jha was about to close his grocery shop at Karol Bagh at around 10 pm, when a customer asked him for a pack of cigarettes with a Rs 500 note in hand. Since it was closing time, the vendor didn't bother to check the veracity of the currency note and handing over a packet of cigarettes, he closed the shop and went home.
Next morning, when he checked out his previous day's earnings, he felt an unusual sense on his hand while holding the Rs 500 note. Later in the afternoon, when he again checked it with a friend working in a bank, the note was found to be fake. Similar was the experience of Mohammed Nasan, an auto driver.
It is not the sole cases to someone likes Santosh or Nasan, there are hundreds of people today in the city who do not exactly aware of fake currency, which has been flooding Indian markets from the neighbouring countries.
According to investigating agencies the amount of fake currency in India is a whopping Rs 169,000 crore. But the Reserve Bank of India officials dispute this figure and say that as of July 2008, the total currency available with the Indian public was Rs 603,000 crore and if what the IB is saying is true, then it would mean that 28 per cent of the currency in the country is fake.
A statement given by the Reserve Bank of India confirms that the detection of counterfeit banknotes have been increased by 103.3 per cent with 3,42,281 pieces have been recovered, which has a value of Rs 15,57, 05,5000 at the Reserve Bank’s offices and bank branches during 2008-09 from 195811 pieces recovered with a value of Rs 5, 49,91, 180. However, it vehemently rejected the media report that Rs 1,69,000 counterfeit notes are in circulation.
In value terms, the counterfeit notes increased by 183.1 per cent during 2008-09 on account of rise in detections in the notes of higher denominations, viz., Rs.100 and above and also on account of the large detection of counterfeit notes of higher denominations at Dumariaganj in September 2008.
The high-level Group on Systems and Procedures of Currency Distribution, headed by Usha Thorat, Deputy Governor, RBI, which was set up by RBI to look into the currency distribution, says that the number of fake notes in India is estimated at 3 to 6 pieces per million, and this is one of the lowest in the world. The Group noted that the RBI appointed Nayak Committee (1988) did not, in fact, make any estimate of forged notes; the figure of Rs 1,69,000 crore refers to the projection made by the Committee of the actual notes in circulation by the year 2000.
According to intelligence reports, fake Indian currency notes racket is being carried out by using the network of underworld kingpin Dawood Ibrahim, not only in India but also in Sri Lanka, Bangladesh and Nepal in close association with different terror outfits.
Fake notes are not a new phenomenon; what is new is the technological sophistication involved, the sharp rise in the amount of counterfeit currency.
According to the National Crime Records Bureau, 2,204 cases of counterfeiting were reported during 2007 and roughly Rs 10 crore worth of fake currency was seized. Sikkim, Uttarakhand and Himachal Pradesh have reported a 200 per cent, 178.6 per cent and 175 per cent increase respectively in counterfeiting cases over 2006.
Upon analysing the trend of FICNs seized as per CCIMS data, Maharashtra reported the highest number of total notes with the number being pegged at 33,567 (having a total value of Rs 1,49,11,870) during 2009 (till August 16).
From 2006 to 2008, Uttar Pradesh was top of the list, reporting highest number of total notes seized and value-wise as well. However, the highest number of FICN seizure cases was reported from Tamil Nadu, with 601 cases in 2008 and 172 cases till August 16 this year.
Minister of State for Home Affairs Ajay Maken even said that Lashkar-e-Toiba was a key player in the massive inflow of fake currency into the Indian market from Pakistan. He even told in the Lok Sabha that the Lashkar had set up a well-oiled criminal network across the country. Syndicates like the D-Company were also behind the inflow of the fake currency.
Even if we go by the report of last week's recovered of Rs 10,00,000 counterfeit notes by Delhi police, the trend is alarming. According to a report given by the Delhi Police, the total amount of fake currency, which was recovered up to November this year is Rs 76,58,300 (including 1500 Euro and US$2000). In the same corresponding previous year, it stood at Rs 59,19,000 (including US$1300).
An official of the Delhi police says that the denomination of Rs 500 is the highest number of pieces being recovered so far at 8,038 followed by Rs 100 at 4934 and 3076 of Rs 1000 respectively. Though, he further informs, all the denominations have been affected by this counterfeit fiasco, Rs 5 denomination has not been touched so far. The official says that most of the counterfeit currency comes from the neighbouring countries like Nepal and Bangladesh, but all starts from Pakistan.
Officials of the RBI say that RBI has taken steps for installation of 250 NSMs at its offices and selected non-currency chest bank branches across the country to check the menace of counterfeit bank notes. It has set up Forged Note Vigilance Cells (FNVCs) at the banks (to ensure stringent levels of anti-counterfeit management in the banking system) to help in the increased detection of counterfeit bank notes.

All currency chest branches of banks (and certain identified non-chest branches which are close to international borders or have heavy cash transactions) have been equipped with Note Sorting Machines to detect and curb the circulation of counterfeit notes. The RBI has been coordinating with the investigating agencies as well as State police authorities for information sharing.