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No end to fake notes problem, data shows huge jump in counterfeit Rs 500 & Rs 2,000

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RBI’s annual report says overall detection of counterfeit notes in fiscal 2018 was 31.4% lower than the previous fiscal.

New Delhi: The annual report of the Reserve Bank of India (RBI) released Wednesday showed that fake notes detected in the denominations of new Rs 500 and Rs 2,000 has jumped sharply even as overall detection fell.

The report said overall detection of counterfeit notes in 2017-18 was 31.4 per cent lower than the previous fiscal — 522,783 pieces as against 762,072.

The number of fake notes of Rs 2,000 jumped to 17,929 in fiscal 2018 — a 2710 per cent increase from 638 pieces in 2016-17. Similarly, 9,892 pieces of counterfeit notes were detected in the new Rs 500 banknotes in 2017-18 — a 4178 per cent jump from 199 in the previous fiscal.

Also read: Rs 13,000 crore – the amount of currency banks did not get back after demonetisation

At the time of the demonetisation exercise, the Narendra Modi government underlined that the move would address the issue of counterfeit banknotes.

Share of fake notes may increase

“The promise of RBI that new currency notes of Rs 2,000 and Rs 500 — post demonetisation — are more secured and less prone to counterfeit is not entirely correct,” said an analysis by the State Bank of India (SBI).

The SBI report added that the banks and the RBI need to be watchful as the share of fake currency notes may further increase in the near future.

The overall reduction in detection of counterfeit notes was primarily due to the decline in cases of fake old Rs 500 notes.

“Now the counterfeiting of currency notes is focused on the high denomination bank notes, this is a cause for concern and the trend must be arrested,” a senior HDFC Bank official told ThePrint.

On 8 November, 2016, Prime Minister Narendra Modi announced withdrawal of high denomination currency notes of Rs 500 (old series) and Rs 1,000 in a televised speech. His government also said the exercise would address the issue of black money.

Also read: To address bad loans, govt asks RBI to identify public sector banks that can be merged

At that point, finance minister Arun Jaitley had said that the use of counterfeit currency notes was causing various “subversive activities such as espionage, smuggling of arms, drugs and other contraband in India.” Counterfeit banknotes was the main cause of a parallel shadow economy, Jaitley had said.

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