Counterfeit notes too are on the rise along with the increasing trend of currency notes in circulation, data available from the Finance Ministry, Reserve Bank of India, and National Crime Record Bureau showed.
Data shows notes in circulation in terms of volume rose to 13,053.3 crore pieces from 9,026.6 crore between the end of March 2016 and March 2022. Similarly, the value went up to ₹31.05-lakh crore from ₹16.41-lakh crore.
However, data from National Crime Record Bureau shows counterfeit currency seized in the country from 2016 to till 2020 surged to over 8.34 lakhs from 2.81 lakhs. The value of fake notes seized went up ₹92.17 crore from ₹15.92 crore.
At the same time, data from RBI also show that during 2021-22, out of the total Fake Indian Currency Notes (FICNs) detected in the banking sector, 6.9 per cent were detected at the RBI and 93.1 per cent at other banks.
Denomination wise spike
Compared to the previous year, there was an increase of 16.4 per cent, 16.5 per cent, 11.7 per cent, 101.9 per cent and 54.6 per cent in the counterfeit notes detected in the denominations of ₹10, ₹20, ₹200, ₹500 (new design) and ₹2,000, respectively. The counterfeit notes detected in the denominations of ₹50 and ₹100 declined by 28.7 per cent and 16.7 per cent, respectively.
“The banknote of denomination ₹500 (old and new notes) has the maximum number of counterfeit notes among these currency notes,” said Minister of State in the Finance Ministry Pankaj Chaudhary said in a response to a question in Lok Sabha last week.
This remark is important, as both government and RBI have also always maintained that new notes have very strong security features, still, fraudsters have found a way to duplicate these new notes as soon as they came into circulation.
However, Chaudhary said, “More than 90 per cent of the counterfeit notes were of low quality and none of the major security features were compromised.” Now, both, the government and the central bank say enhancing the security feature is a continuous process and effort is on.
In fact, in its annual report for FY22, RBI said its agenda includes the “establishment of a state-of-the-art facility for conducting cutting edge research to test the robustness of security features of banknotes and introduction of new security features” as a part of its Medium-term Strategy Framework, better known as ‘Utkarsh’.
Demand for currency notes
Though the government has maintained that there is a rise in digital payment, still, the currency note in circulation is going up. Finance Ministry officials acknowledged that demand for currency notes depends upon factors such as the expansion of the economy, interest rates, and inflation.
Though the use of digital means in transactions has surged, still, cash transaction is at a significant level which necessitates demand for currency notes. Officials say, cash transactions at a high level in one way or other, also provide some opportunity for fake notes and this could be one reason for cases of such notes rising. It is very difficult to estimate how many notes are in the system as of date.
Currency notes in circulation
Counterfeit currency seized
Counterfeit notes detected in the banking system
July 24, 2022