&imwidth=800&imheight=600&format=webp&quality=medium "RBI flags increase in counterfeits of high value denomination")
The RBI annual report shows a nuanced picture of counterfeiting in India. Even though there is a decrease in the total number of counterfeited notes for the third consecutive year, there has been a significant surge in the counterfeiting of Rs 500 notes.
According to the report released on May 29, 2025, banks have detected 2,17,396 fake currency notes in FY 25, a decrease in number from 2,22,639 in FY24 and 2,25,769 in FY23, implying the enhanced security features of the banknotes and increased vigilance in the banking sector.
Notably, the troubling trend is the increase in counterfeit Rs 500 notes, which witnessed a year-over-year (y-o-y) growth of 37.3 per cent, with 1.18 lakh fake notes being detected in FY25, up from 85,711 detected in FY24. A similar trend was observed for Rs 200 notes, with a fake currency count of 32,660.
A contrasting trend is seen for counterfeit Rs 2000 notes, with only 3,508 pieces compared to the 26,035 of last year, a total decrease of 86.5 per cent. A similar trend was observed for the counterfeit detection of the lower denominations, like Rs 10, Rs 20, Rs 50 and Rs 100.
Why is it alarming
This is alarming considering the distribution of denominations in the notes that are in circulation in the market. Rs500 constitutes 40.9 per cent of all the currency in circulation, and it accounts for 80.6 per cent of the total value of the market currencies. So this denomination is central to India's cash flow. Demonatisation which was announced in 2016 to cripple terror funding, counterfeiting and reduce black money in circulation, doesn't reflect in the data. The fake currency note of Rs 2000 did witness a decline, which is partly due to its gradual withdrawal from circulation. Security agencies have persistently established a link between counterfeiting and terrorism. In the early 2010s, Indian security agencies traced counterfeit notes to Pakistan ISI-backed printing facilities. This recent RBI report is counter to the government's narrative and raises major red flags.
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The central bank is responding to these challenges with increased vigilance. It has ceased printing of Rs 2, Rs 5 and Rs 2000 notes. It is also promoting the Indian digital rupee, with its value increased by 334 per cent in 2024-25.
