Unfortunately, the issue of fake Indian currency is a huge problem that's been growing in recent years. Counterfeiters are becoming so clever and the newest notes are made so well, it's difficult to identify them.
How do you spot fake notes? Find out some tips in this article.
The Problem of Fake Indian Currency
Fake Indian Currency Note (FICN) is the official term for counterfeit notes in the Indian economy. Estimates vary as to how many fake notes are in circulation. A study completed by the National Investigation Agency in partnership with the Indian Statistical Institute (ISI) stated that the value is 400 crore rupees ($4 billion).
Fake notes are even dispensed from ATM machines at banks in India, particularly higher denomination notes.
The Indian government has been putting a lot of effort into addressing the issue of fake currency, including changing the design of notes to make them harder to copy and implementing a surprise overnight demonetization of existing 500 and 1,000 rupee notes.
On November 8, 2016, the Indian government declared that all existing 500 rupee and 1,000 rupee notes would cease to be legal tender from midnight. The 500 rupee notes have been replaced by new notes with a different design, and brand new 2,000 rupee notes have been introduced for the first time.
However, it didn't reduce the problem of fake currency. Only three months after the newly minted 2,000 rupee note was introduced in India, multiple counterfeit copies of it were found and confiscated. There were even instances of fake notes being issued in the name of the "Children's Bank of India" and dispensed from ATMs.
The Reserve Bank of India has announced that it will be progressively redesigning all currency notes. New 200 and 50 rupee notes were introduced in August 2017. This was followed by a new 10 rupee note in January 2018. A new 100 rupee note is expected to be issued in the second half of 2018.
In April 2018, a report by the Financial Intelligence Unit stated that Indian banks not only received the highest ever amount of fake currency in 2016-17, but also detected more than a 480% increase in suspicious transactions post demonetization.
The Reserve Bank of India's 2017-18 Annual Report, which was released in August 2018, also indicated that the new currency notes aren't necessarily more secure or less prone to counterfeit. There was a 154% increase in the number of fake 50 rupee notes detected in 2017-18 compared to 2016-17. In addition, the number of detected fake 2,000 rupee notes grew by 2,710%, while fake 500 rupee notes jumped by 4,871%.
But where do the fake notes come from?
Sources of Fake Currency
The Indian government believes that the notes are produced by foreign racketeers in Pakistan, on demand from Pakistan's military intelligence agency, the Inter-Services Intelligence (ISI). India's National Investigation Agency found that fake Indian currency was used by Pakistani terrorists involved in the 2008 attack in Mumbai.
According to news reports, the main motive behind Pakistan's printing of the fake notes is to destabilize the Indian economy. It's a major issue for the Indian government, which aims to make the counterfeiting of Indian currency an offense under the country's anti-terrorism law, the Unlawful Activities (Prevention) Act 1967.
Pakistan is believed to have numerous counterfeit currency networks operating out of Nepal, Bangladesh and Thailand. Countries such as the United Arab Emirates, Sri Lanka and Malaysia are also used as transit points.
In August 2018, the Indian government disclosed that from the date of demonetization up until June 30, 2018, nearly 43% of fake Indian currency seized was in Gujarat state. A further 15.8% was recovered from Uttar Pradesh and 14.4% in West Bengal. Significant amounts of fake currency were also found in border states including Mizoram, Jammu and Kashmir, Punjab, and Rajasthan. However, the problem is no longer restricted to border states. Counterfeit 2,000 rupee notes, which were said to look so genuine it would be hard for the average person to identify them as fake, were recently seized in Bangalore.
How to Spot Fake Indian Currency
There are a number of signs that indicate currency is fake. These include:
- Watermarks that look thick. Counterfeiting gangs commonly apply oil, grease or wax to give the picture a translucent feel.
- Imitation security threads that have been drawn or printed on, instead of being incorporated through the currency at the time of manufacture.
- Figures that are out of alignment. Smaller or bigger number, inadequate gaps, and different alignments in numbers should be regarded with suspicion.
- Printed lines that are broken and ink smudges.
- Lettering used for the "Reserve Bank of India" that's thicker than usual.
Familiarize Yourself with Indian Currency
However, the best way to spot fake Indian currency is to familiarize yourself with what real Indian currency looks like. The Reserve Bank of India has a website called Paisa Bolta Hai (money speaks) for this purpose. It contains large pictures of all the new Indian notes with detailed descriptions of their security features.
Do make sure that you check your Indian currency, as there is a significant chance of ending up with a fake note.
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