RBI annual report: How the central bank is fighting fake notes problem

The Reserve Bank of India disclosed in its annual report on Wednesday that it had launched a nation-wide survey to estimate the density of fake Indian currency notes (FICNs).

According to the RBI, during 2016-17, 762,072 pieces of counterfeit notes were detected in the banking system, of which 95.7 per cent were detected by commercial banks. Detection of counterfeit notes was 20.4 per cent higher than the previous year.

Barring Rs 100, the detection of counterfeit notes increased across denominations - notably, 500 and 1,000 - during 2016-17. As per the survey, the result showed the rate of FICN detected per million pieces of notes at 7.1 pieces for 500 denomination and 19.1 pieces for 1000 denomination.

"At the Reserve Bank's currency verification and processing system, during 2015-16, there were 2.4 pieces of FICNs of Rs 500 denomination and 5.8 pieces of FICNs of Rs 1000 denomination for every million pieces notes processed; which rose to 5.5 pieces and 12.4 pieces, respectively, during the post-demonetisation period. As compared to 2015-16, 12 clusters for Rs 500 denomination and 14 clusters for Rs 1000 denomination showed statistically significant higher rate of FICN detection during the post-demonetisation period. This implies a signifi cant pick-up in the rate of FICN detection at the Reserve Bank level in the post-demonetisation period as compared to a year ago," the report said.

The RBI is also working with the government to maintain a data on fake notes. It said the National Crime Records Bureau (NCRB) under the Ministry of Home Affairs has designed a uniform proforma for collection of Fake Indian Currency Note (FICN) data.

In fact, a web-enabled software for uploading data on FICN detected by banks and law enforcement agencies has been developed. The Reserve Bank has confirmed it is facilitating implementation of the system in collaboration with NCRB.

The RBI also disclosed that the number of suspicious transaction reports filed by banks and other financial intermediaries with the central government's Financial Intelligence Unit. Interestingly, it has witnessed a massive jump.