The Reserve Bank of India will soon revise the procedure for authentication of currency notes by banks before it goes to customers. The move is aimed at curbing the hazard of increasing number of counterfeit currencies in circulation.
"Banks are advised to streamline their system in a manner which will make them bear the risk of counterfeit bank notes rather than the common man who unknowingly comes in possession of such notes," RBI said in its Annual Monetary Policy statement.
The number of counterfeit notes in circulation has risen to 4.3 lakh in 2010-11 from 3.89 lakh in 2008-09, according to RBI data, even as the number of such fake notes at RBI's vault has declined to 45,235 notes from 52,620.
In February, RBI had filed a FIR against nine state-run and private lenders, including some branches of State Bank of India, ICICI Bank, Oriental Bank of Commerce, Indian Overseas Bank, Vijaya Bank, Bank of India, Syndicate Bank and Allahabad Bank, for having fake currencies in their vaults. Fake notes worth 39,030 were deposited by these banks in denominations of 10, 50, 100, 500 and 1,000.
RBI has already put in place a mechanism which processes notes of 100 and above denomination through machines confirming to RBI's standards, before issuing them over the counter through ATMs. But this has not improved the detection ratio from banks.
"Despite the above measure and after rationalising the procedure of filing FIRs, the detection and subsequent reporting of counterfeit bank notes by banks continue to be inadequate," the central bank said.
This has serious repercussions as RBI is unable to assess the number of counterfeit notes in circulation and its ramifications for the economy.
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