Fake Indian Currency and How to Spot It

Women with new Rupees Notes in hand, India
••• anand purohit/Getty Images

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. According to a study completed by the National Investigation Agency in 2015, it's 400 crore rupees. However, in 2011, a report by the Intelligence Board indicated that 2,500 crore rupees in fake currency is coming into the Indian market each year.

It's estimated that four out of every 1,000 notes in circulation in India are fake. Fake notes are even found in cash withdrawn from ATM machines at banks in India, particularly higher denomination notes.

The Indian government is putting a lot of effort into addressing the issue of fake currency. News reports state that detection increased by 53% in 2014-15. In addition, in 2015, the Reserve Bank of India changed the design of the number panels on the 100, 500 and 1,000 rupee notes to make them harder to copy.

Furthermore, 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 The 500 rupee notes have been replaced by new notes with a different design, and brand new 2,000 rupee notes have been introduced for the first time.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, major seizures of fake currency still continue. In fact, only three months after the newly minted 2,000 rupee note was introduced in India, multiple counterfeit copies of it were found and confiscated.

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 a terrorist offense under the Unlawful Activities Prevention Act.

Apparently, Pakistan has been able to set up a fake Indian currency production unit in Dubai. Fake notes are being smuggled into India via Nepal, Bangladesh, Afghanistan and Sri Lanka. Malaysia, Thailand, China, Singapore, Oman and even Holland are also emerging as new transit centers.

The latest data released by the National Crime Records Bureau (NCRB) indicates that Gujarat is considered to be the safest state for circulating counterfeit currency. This is closely followed by Chhattisgarh. Other states where large amounts of fake notes have been recovered are Andhra Pradesh, Punjab and Haryana.

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 launched a website called Paisa Bolta Hai (money speaks) for this purpose. It contains printable pictures of the new 500 rupee and 2,000 rupee notes, and 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.

    Received fake Indian currency? Here's what you can do.