Wednesday, August 29, 2012

Fake Currency

Fake Currency/Counterfeit Notes
Counterfeiting of money is almost as old as printing of currency. At some period in history, it was considered treasonous enough to warrant punishment by death. It was in 1650 AD that paper money was developed and counterfeiting flourished, especially within America where counterfeit money was more common than genuine money. Counterfeiters had become so skilled that when the first federal coins were issued by the US Government in the 1780s, they had the dies cut by an ex-counterfeiter. However, it was the advent of colour copiers and other electronic devices in late twentieth century that made counterfeiting easier. Around the world, governments are locked in a fierce race with counterfeiters to keep that one crucial step ahead in terms of technology and security features. Governments are also tightening measures to check counterfeiting, apprehend counterfeiters and impose deterrent and harsher punishments.
Data available in the public domain suggests that the incidence of counterfeiting varies across different countries. While in Australia, counterfeit notes detected were around seven pieces per million notes in circulation (2008-09), in Canada it was 76 (2008). In New Zealand, the number was a low of 0.71 counterfeits per million notes in circulation (2008-09), whereas in Switzerland it was ten. As for the euro, there was roughly about one counterfeit per 14,600 bank notes in circulation (2008). At home here in India, fake notes reported as detected by banks and fake notes found in remittances received by RBI during 2008-09 amounted to eight per one million notes in circulation. The data however does not include the counterfeits that are seized by police. The above data shows that, by an international metric, the incidence of counterfeit notes in India is not alarming. Nevertheless, counterfeiting per se is a matter of serious concern for the Government and the Reserve Bank.
While on the subject of estimate of fake notes, I want to make a clarification. Last year, some newspapers had erroneously quoted a figure from the Nayak Committee Report for estimates of forged currency notes in circulation. The Nayak Committee, which was set up in 1988 to go into the dynamics of currency management, did not make any estimate of fake currency. What it estimated was the projected value of notes in circulation in the year 2000 which has Rs. 1,69,000 crore. The media incorrectly reported this as the number of fake notes in circulation. 
The Reserve Bank’s role in addressing the problem of counterfeiting lies in improving the security features of the currency notes, putting in place a system where all fake notes making entry into the banking channel are promptly detected, and raising public awareness levels. For the sake of completeness, let me list the measures initiated by Reserve Bank for addressing the menace of counterfeiting:
  • Awareness and publicity campaigns.
  • Augmenting the security features. Non disruptive withdrawal of notes in old series by replacement with notes in new series.
  • Use of note sorting machines in all large cash handling branches in a phased manner so that all notes are sorted before reissuing to customers. To start with, all branches, where the daily average cash receipts are more than Rs. 1 crore, will have to do this by March 2010, and those where the daily average cash receipts are between Rs. 50 lakh and Rs. 1 crore, by March 2011. 
  • Installation of note sorting machines at select non-chest bank branches (210) by RBI on a mix of criteria viz. volume of cash handling, counterfeit detection and proximity to international border.
  • ATMs to be equipped with sensors for detecting counterfeit notes. Till then, banks are to ensure that the ATMs are filled only with notes that have been sorted through Sorting Machines.
  • Creation of Forged Notes Vigilance Cells in banks.
  • Formation of security committees in each state including representatives of police, banks, etc. to deal with the problem of counterfeiting.
  • Strengthening security systems at currency chests and more intensive supervision of chests by RBI.
RBI’s efforts at checking counterfeiting will be effective only if there are equally effective efforts by banks. Banks should ensure that counterfeit notes are promptly detected once they enter the banking system, and that there is prompt and accurate reporting. They should ensure that only clean and genuine notes are issued through their ATMs and over the counters. As currency notes are an integral part of our daily life, we, as users, should understand the various security features of the notes. These features are prominent, and can be easily identified. Enhanced public awareness will by far be the most effective deterrent to counterfeiting.

How do you Spot a Fake Rupee?
Almost every country in the world face the problem of counterfeit currency notes, but in India the problem is acute as the country is hit hard by this evil practice. Fake notes in India in denominations of Rs.100, 500 and 1000 are being flooded into the system.
The Reserve bank of India estimates that there is at least Rs.2 trillion fake rupee notes in circulation throughout India. It is suspected that almost all of these notes originate from security presses located elsewhere.
A common person does not know what to do when he gets a fake rupee note. The best way to counter it is to know how to detect fake notes and prevent it from

Detecting a Fake Rupee Note

So how do you detect fake currencies in rupees? Here are some ways in which you can detect these notes.
  • Paper Quality – People who constantly deal in money can detect a fake rupee by mere touch, especially when counting money. The paper used for printing currency notes cannot be from a stationary shop. Genuine currency notes have a crispness and solidity to them that are absent in fake notes.
  • Visual Fake Currency Detection – There is a floral design printed on the left side of Indian currency notes. Half of the currency denominations are printed on the front of the note and the other half is printed at the back. If looked against a bright light, the whole of the denomination appears.
  • Immediately below the floral design, there is a mark printed in intaglio in which the image is in a slightly raised manner. This is for the aid of visually handicapped to differentiate between denominations. The intaglio print is a circle for Rs.500 note, a triangle for Rs.100 denomination and a square for Rs.50.
  • In the same manner a portrait of Mahatma Gandhi, a promise and guarantee clause, the RBI seal, the emblem of the Ashoka Pillar on the left as well as the signature of the RBI Governor are printed in intaglio.
  • A narrow band seen on the right of the rupee note displays the latent image of the denomination of the Indian bank note. This denomination is clearly seen when the banknote is held at eye level, horizontally.
  • A security thread with the inscriptions of RBI and ‘Bharat’ in Hindi runs along every banknote.
  • Machine Detection – The security thread present in all Indian currency notes fluoresces on either side if held against ultraviolet light.
  • All serial numbers of all rupee notes are printed using fluorescent ink that can be clearly seen if viewed against ultraviolet light.
There are many electronic gadgets (Fake Rupee Detectors) are available in consumer electronic shops to detect fake currency and it will cost anywhere between Rs.1500 and 4000.
Godrej, Klick and Methodex Systems make some of the most popular currency detectors. Specially made laser torches also are used to identify fake currency notes.

What to do if you get a Fake Rupee?

If you get a fake note from an ATM or a bank or by withdrawal in person, you must make a complaint to the nearest police station and inform them of the source of the fake currency.
If the police officials cannot establish the bank mentioned in the complaint as the source of the fake money, it will be dispatched to the Reserve Bank of India for further investigations. If the bank note could be traced to a bank, it will destroy the fake note.
It may sound impractical, but checking each note before leaving an ATM or bank is the best method to prevent getting fake notes.
If you are handling hundreds of notes at a time, it may be wise to invest in an ultraviolet pen or currency detection devices. After all, it is your money and you are entitled to get original currency.

The Problems in Counterfeit Rupee Awareness

If a fake currency note finds its way into your hand and you are unable to explain from where you got it in the first place, you are liable to be jailed. Many people avoid dealing with such a problem legally for the simple reason that it is hard to deal with the police and the courts.
Another problem is that it is impossible to check every rupee note, especially if it is taken from a bundle of notes. So people just pass the notes along to others and in case someone finds out that the note is a fake they give another note. Most people in India do not know how to distinguish a fake currency note from a genuine note.
To make things worse, it is a legally punishable offense if you try to pass fake currency with the knowledge that it is not genuine. Sometimes the punishment can be as much as life imprisonment.
So what should one do to solve the problem that can confront us any time? There should be more awareness from our part about the legal implications and how to prove your innocence. We must also be extra cautious when dealing with money and always on the lookout for these fake notes.

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