Recently, the Ministry of Finance shared some crucial information at Lok Sabha on decreasing counterfeit notes in the Indian banking system. From Rs 43.47 crore in 2016-17, its value has dwindled down to nearly Rs 8.26 crore in 2021-22.
Understanding Counterfeit Money
Counterfeit money pertains to the creation and usage of fake money with an aim to deceive by passing it off as genuine currency. This is often seen as a separate crime from forgery under section 489A of the Indian Penal Code because of the value conferred on money and the sophistication needed to successfully replicate it. This fraudulent act is arguably the oldest trick in the book used by swindlers to deceitfully amass wealth from unsuspecting victims.
Threats Posed by Counterfeiting
The circulation of counterfeit currency can lead to serious problems like economic terrorism, inflation, loss of public trust, and non-reimbursement of losses to name a few. Economic terrorism is where Fake Indian Currency Notes (FICN) are used as tools by foreign forces to sabotage the Indian economy. It refers to the secret manipulation of a country’s economy by state or non-state actors.
Further, an abundance of counterfeit money in the market can fuel demand for goods and services, leading to scarcity and price hikes. This results in the devaluation of legitimate currency. Moreover, banks’ non-reimbursement policy where fake notes are denied reimbursement causes substantial long-term losses for businesses dealing in daily cash transactions. Lastly, the infiltration of counterfeit currency can erode public confidence and give rise to issues like black marketing and illegal stockpiling of products.
Government Strategies to Curb Counterfeit Currency
To curb counterfeiting, the Indian government has taken several measures. It started with demonetisation on 8th November 2016, which saw Rs. 500 and Rs. 1,000 notes being removed from circulation. This move aimed to deter the use of high-denomination notes for illicit transactions and counterfeit currency production.
In terms of technology, the Council of Scientific and Industrial Research (CSIR)-National Physical Laboratory developed a bi-luminescent security ink that glows in red and green when exposed to different light sources.
Efforts towards Coordinated Action
On the institutional front, a Terror Funding and Fake Currency (TFFC) Cell was established within the National Investigation Agency (NIA) to spearhead investigations into terror financing and counterfeit currency cases. Additionally, the Ministry of Home Affairs founded the FICN Coordination Group (FCORD) which functions as an intelligence sharing platform for state and central security agencies to combat counterfeit currency circulation.
International Cooperation to Combat Counterfeiting
Internationally, a Memorandum of Understanding (MoU) was signed between India and Bangladesh to thwart the smuggling and circulation of counterfeit notes. Alongside this, border security has been reinforced with cutting-edge surveillance technology to help intercept illegal activities involving counterfeit notes.
Last Modified: February 18, 2024