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The Reserve Bank of India (RBI) has directed banks to strengthen their counterfeit currency detection systems after finding that some lenders were not adequately identifying and reporting fake Indian currency notes (FICNs). Banks have been instructed to install note authentication and sorting machines at branches located in districts along international borders, enhance staff training, and improve monitoring of counterfeit notes. The RBI has also set a deadline of October 31, 2026, for completing the training of all cash handling staff and asked banks to use counterfeit note data to identify hotspots and strengthen preventive measures.
The Reserve Bank of India (RBI) has directed banks to ensure that all branches located in districts along India's international borders are equipped with note authentication and sorting machines after finding gaps in the counterfeit currency detection efforts of some lenders.
The direction follows the comprehensive Master Direction issued by the RBI earlier this year, which laid down detailed guidelines for the detection, reporting and monitoring of Fake Indian Currency Notes (FICNs). The framework requires banks to strengthen their systems for identifying counterfeit notes and handling such cases in a uniform manner.
The central bank said its assessment found that the efforts made by some banks to detect counterfeit currency were not adequate. It has therefore asked lenders to review their existing processes and further strengthen their preparedness to identify, impound and report fake currency notes effectively.
Under the existing instructions, banks are required to train all employees involved in cash handling on the security features of genuine banknotes so they can identify counterfeit currency. Every banknote received by a bank must be checked for authenticity using note authentication or sorting machines. The RBI has reiterated that counterfeit notes must be impounded in every case and should neither be returned to the person tendering them nor destroyed at the bank. All detected FICNs must also be reported in accordance with the prescribed guidelines.
As an additional measure, the RBI has now instructed banks to ensure that branches operating in districts with international borders are equipped with note authentication and sorting machines. The move is aimed at strengthening surveillance and improving counterfeit currency detection in border regions, where the risk of circulation of fake notes is generally considered higher.
The RBI had already directed banks earlier this year to equip all bank branches and identified back offices with ultra-violet lamps and note sorting or authentication machines to facilitate the detection of counterfeit currency. The latest circular places additional emphasis on ensuring that branches in border districts comply with these requirements.
The central bank has also advised banks to adopt a focused and target-based approach while conducting awareness and refresher programmes for employees handling cash. It has made it mandatory for all cash handling staff across banks to complete training on identifying genuine banknotes and detecting fake currency by October 31, 2026.
In addition, banks have been instructed to strengthen the functioning of their Forged Note Vigilance (FNV) cells. These units have been asked to analyse counterfeit currency data to identify potential hotspots, monitor trends and use the findings to improve awareness programmes, staff training and other capacity-building initiatives.
The RBI has periodically tightened counterfeit currency detection norms over the years by introducing advanced security features in banknotes and requiring banks to improve screening and reporting mechanisms. The latest measures are intended to enhance the banking system's ability to detect fake currency at the branch level and ensure faster reporting and better monitoring of counterfeit note circulation.
Source PTI
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