Pic: Roopa Kulkarni

After eating at a restaurant in Gandhi Bazar with his friends, Raghavendra (name changed), a resident of Basavanagudi, kept two currencies of Rs 500 denomination with the bill. The waiter who collected it returned red-faced and blamed Raghavendra as the notes were fake. “I somehow managed to use my debit card, pay the bill and sneak out of the restaurant,” says an embarrassed Raghavendra.

Later Raghavendra dropped into Vijaya Bank ATM in Gandhi Bazar with his ATM slip, where he had withdrawn money the previous night. He was sure the forged notes came from this ATM. Without knowing whom to approach, a panicked Raghavendra approached the security guard with his withdrawal slip, but that did not help in any way.

His friends advised him to either destroy the fake currency or surrender it to the bank. However in both cases, he would not get his money back. Raghavendra honestly admits that he managed to pass on the fake notes in another restaurant, because, “Why would I lose the sum of Rs 500 by surrendering it to the bank?”  It was not his fault, after all!

If you happen to get hold of a fake currency, it is not likely to be refunded to you. This explains the reason people choose to recirculate the fake currencies, instead of reporting it to authorities—no one wants to lose money.

However, possessing a fake currency or circulating it is a punishable offence according to Reserve Bank of India (RBI). Bengaluru Crime Control Bureau’s Deputy Commissioner of Police Abhishek Goyal says that in addition to forging the notes, the attempt to circulate the counterfeit currency with the knowledge that it is fake, is punishable under IPC section 489C, and can attract fine or imprisonment ranging from seven years to life imprisonment or both, depending on the offence. Whereas, counterfeiting currency amounts to imprisonment for life or a period up to ten years according Section 489A of the Indian Penal Code.

Bank is responsible if you receive a fake note from an ATM

Nandakumar, a manager at Canara Bank in Sadashivanagar, rules out the possibility of forged notes coming out from ATMs. “The currency goes through forged note detector machines before the contractors outsourced by the banks deposit money into ATMs. If counterfeit notes are detected, they are taken out of the bundle and sent to RBI for destruction,” he adds.

Kumar (name changed to protect identity), a HR manager at a company that is an outsourced vendor for ATM management servicing multiple banks, says their responsibility is to collect the money from the banks and fill it in the ATMs. The currency check procedures are taken care of by the respective banks, he says.

There are currency chests established in several banks where banknotes and rupee coins are stocked on behalf of the Reserve Bank. The currency chest branches are expected to distribute banknotes and rupee coins to other bank branches in their area of operation. The same currency chests take the custody of forged notes too, which is later sent to RBI for the destruction, says Nandakumar.

Another manager who works in a public sector bank in Bengaluru, on the condition of anonymity too says that the chances of fake notes emerging out of ATM is way too rare. “We have never received such complaints from our bank customers. But, yes, I have heard about such instances taking place in ATMs elsewhere, which may be due to the bank’s ineffective mechanism to detect fake notes,” he says.

To a question on who is responsible if ATMs omit counterfeit notes, he says the responsibility is on the bank alone and the outsourced agency that transfers cash into the ATM has nothing to do with it. If fake currency detector machine shows signs of suspicion while checking a note, such currency has to be manually checked by the bank employee. Lethargic attitude might at times pave the way for the fake note entering into the ATM, he added.

In fact, the RBI’s Master Circular dated July 1st, 2014 holds banks responsible for their failure to detect fake notes and instructs as follows:”Failure of the banks to impound counterfeit notes detected at their end will be construed as willful involvement of the bank concerned, in circulating counterfeit notes and penalty will be imposed for violation of Directive No. 3158/09.39.00 (Policy)/2009-10 dated November 19, 2009 issued by the Reserve Bank.” The RBI in its circular has also directed the respective banks to file a police complaint if the bank receives more than four counterfeit notes in one transaction.

Why are fake note and mutilated note detectors not installed in ATMs?

In the same Master Circular, the RBI, in the wake of complaints regarding receipt of counterfeit notes through ATMs and to curb circulation of counterfeits, had directed the banks to put in place adequate safeguards/checks before loading ATMs with notes. “Dispensation of counterfeit notes through the ATMs would be construed as an attempt to circulate the counterfeit notes by the bank concerned,” the Circular read.

However, ATMs do not have a mechanism to either detect fake notes or mutilated notes. Detection machines are present in the banks. The detection procedure is carried out in the banks before the cash is outsourced to the private agencies.

“ATMs should have fake currency detectors, but as of now we do not have any such detector-inbuilt-ATM machines in the country. If this technology comes into existence, banks are going to be more careful before they outsource the job of putting cash into the ATMs,” says Nandakumar.

Misconceptions among people between an old note and a new note

That apart, there lies a confusion in the minds of people, on old notes and forged notes. Usually some shopkeepers return currencies of Rs 10, 20, 50, 100 and 500 denominations, saying they are old and currently not accepted. These notes are not considered fake or counterfeit currency but are pre-2005 series banknotes. They can be exchanged for its full value in any bank, says Nandakumar.

People often do end up feeling that such a note is fake, due to the absence of the year of printing. “Banknotes printed before 2005 do not have the year of printing on the reverse side and hence can be easily distinguished but are not fake,” says RBI.

RBI says these notes can be exchanged by the post-2005 series banknotes if they are surrendered to the Banks or RBI directly. These notes can be freely exchanged at any bank branch till June 30, 2015. After that, these notes will become invalid. So get rid of your stock of old notes before they become obsolete. The procedure to be followed after June 30, 2015, will be notified by the RBI in due course.

Meanwhile, banks have been advised to stop re-issue of the pre-2005 series notes over the counters/through ATMs, and they have been instructed to forward them to the RBI.
Banks are also advised by the RBI to provide exchange facility to people with zero exchange charges, for all pre-2005 currencies, says RBI.

Do soiled, mutilated and imperfect notes worry you?

RBI has a remedy for this. Soiled notes are those which become dirty due to usage. A mutilated banknote is a banknote, of which a portion is missing or composed of more than two pieces pasted together, to form the entire note. Retailers and auto rickshaws reject such notes.
An imperfect banknote is any note, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable.

RBI provides a provision under Reserve Bank of India (Note Refund) Rules, 2009, of exchanging soiled, mutilated and imperfect banknotes for full value at each bank, for both customers and noncustomers.

Banknotes in denominations of Rs 1, Rs 2, Rs 5, Rs 10 and Rs 20, are exchanged for full value wherein mutilated banknotes in denomination of Rs 50, Rs 100, Rs 500 or Rs 1000, can be exchanged for half value if, the undivided area of the single largest piece of the note presented is equal to or more than 40 percent and less than or equal to 65 percent of the area of respective denomination, rounded off to the next complete square centimeter.

What to do if you get hold of a fake currency?

Rajashekhar, who works as a customer service support for Canara Bank, JC Road, told Citizen Matters that one should file an FIR at the nearest police station in case of finding a fake currency. Police will conduct an investigation. If the bank is found guilty, then Reserve Bank of India can penalise the bank, says Nandakumar.

Bengaluru CCB’s erstwhile DCP Abhishek Goyal informed Citizen Matters a few simple steps to file a FIR against the bank.

1.       Identify fake notes.
2.       Write down the series of the note that is present at the right top and left bottom of the note.
3.       Present the transaction slip and the passbook of the account holder.

ATM security guard is not considered as evidence while filing a FIR, says Abhishek Goyal. He also advises ATM users to verify the notes once they collect the cash from the machine and to preserve the transaction receipts which would help them in filing a case even if the fake notes are identified later on during the off bank timings.

Another precautionary measure that a customer should take is to hold the currency in front of the CCTV Camera inside the ATM once the money is withdrawn. This will serve you as a shred of evidence if at all you end up receiving a fake note from the ATM.

“A responsible citizen should present it to the custody of a bank and then the bank shall send it to the RBI where such currency is destroyed,” says Abhishek Goyal, advising people against re-circulating fake currency.

He adds that forged notes enter the society through antisocial elements. With most of the fake currencies smuggled to India through neighbouring Bangladesh, this currency could be used for anti-national activities and could also add to inflation.

How much fake currency is being circulated?

Fake notes of Rs 500 dominate the scene, although currency counterfeiters appear to have started targeting Rs 100 and Rs 1,000 denominations, says A K Mehrotra, Issues Department, RBI, Bengaluru.
The banking system detected over 2.52 lakh pieces of counterfeit notes of Rs 500 denomination in 2013-14, as against the 2.81 lakh in the year 2012-13, while the number of Rs 1,000 denomination fake notes rose to 1.10 lakh as against the 98,459 in the year 2013-14. However, the year 2014-15 seems to have seen more counterfeit currencies than ever before.

How to identify a counterfeit currency?

RBI defines a counterfeit currency or a forged note, or fake note as “any note that does not possess the characteristics of genuine Indian currency notes.”

Every genuine Indian currency note has definite characteristics that cannot be copied by counterfeit currencies. These features are easily identifiable by seeing, touching and tilting the note. More details can be seen here.

With inputs from Akshatha M, Staff Journalist, Citizen Matters.

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