DCM(FNVD) No.G-5/16.01.05/ 2011-12
July 1, 2011
The Chairman / Managing Director,
Commercial Banks,Cooperative Banks, RRBs /
Private Banks,Foreign Banks and
Director of Treasuries of all States
Master Circular – Detection and Impounding of Counterfeit Notes
Please refer to the Master Circular DCM (FNVD) No.G-4/16.01.05/ 2010-11 dated July 1, 2010 consolidating the instructions issued till June 30,2010 relating to detection and impounding of Counterfeit Notes. The Master Circular has been since been updated by incorporating the instructions issued till date and has been placed on the RBI website www.rbi.org.in.
The Master Circular is a compilation of the instructions contained in the circulars issued by RBI on the above subject which are operational as on the date of this Circular.
(Dr. N Krishna Mohan)
Chief General Manager
Master Circular – 2011
RESERVE BANK OF INDIA
DEPARTMENT OF CURRENCY MANAGEMENT
MASTER CIRCULAR - 2011
Detection and Impounding of Counterfeit Notes
Para 1 Authority to Impound Counterfeit Notes
The Counterfeit Notes can be impounded by -
(i) All branches of Public Sector Banks.
(ii) All branches of Private Sector Banks and Foreign Banks.
(iii) All branches of Co-operative Banks & Regional Rural Banks.
(iv) All Treasuries and Sub-Treasuries.
(v) Issue Offices of Reserve Bank of India.
Para 2 Stamping and Impounding of Counterfeit Notes
Each banknote, which, on examination of various security features / parameters, is determined as a counterfeit one, shall be branded with a stamp "COUNTERFEIT BANKNOTE". For this purpose, a stamp with a uniform size of 5 cm x 5 cm with the following inscription may be used.
COUNTERFEIT BANKNOTE IMPOUNDED
COUNTERFEIT BANKNOTE IMPOUNDED
BANK / TREASURY/ SUB-TREASURY
Each such impounded note shall be recorded under authentication,in a separate register.
Para 3 Issue of Receipt to the Tenderer
When a banknote tendered at the counter Issue Office of the Reserve Bank or a bank branch, or treasury is found to be counterfeit, an acknowledgement receipt in the format (Annex I) should be issued to the tenderer, after stamping the note as in Paragraph 2 ibid.
The receipt, in running serial numbers, should be in duplicate and should be authenticated by the cashier as well as by the tenderer. Notice to this effect should be displayed prominently at the offices / branches for the information of the public. Acknowledgement receipt shouldbe issued even in cases where the tenderer is unwilling to countersign the receipt.
Para 4 Detection of Counterfeit Notes in Cash Tenders
A counterfeit note detected in the cash received by the bank branch/Treasury, across the counter shall be impounded in the presence of the tenderer, in the manner detailed in Para 2 above. It shall be forwarded to the local police authorities for investigation by filing anFIR (Annex II) or nodal police station, as applicable.
A copy of the FIR shall be sent to the Forged Note Vigilance Cell constituted at the Head Office of the bank (only in the case of banks), and in the case of the treasury, it should be sent to the Issue Office of the Reserve Bank concerned. Particulars such as name, address of the tenderer and his / her statement as to how the said note came into his / her possession shall also be forwarded to the police authorities.
FIR is required to be filed in respect of each case of detection of counterfeit note irrespective of the number of pieces and bonafides of the tenderer. Acknowledgement of the police authorities concerned has to be obtained for note/s forwarded to them. If the counterfeit notes are sent to the police by insured post, acknowledgement of receipt thereof by the police should be invariably obtained and kept on record. A proper follow-up of receipt of acknowledgement from the police authorities is necessary. In case, any difficulty is faced by the Offices / Branches due to reluctance of the police to fileFIRs, the matter may be sorted out in consultation with the Nodal Officer of the police authority concerned or the Nodal Officers of the Central Bureau of Investigation designated to coordinate matters relating to investigation of counterfeit banknotes cases. A list of Nodal Officer of the Central Bureau of Investigation designated to coordinate matters relating to investigation of counterfeit banknote cases is enclosed (Annex VII)
In no case, the counterfeit notes should be returned to the tenderer or destroyed by the bank branches / treasuries
The data on detection of counterfeit Indian notes at bank branches & treasuries should be included in the monthly Returns forwarded to the Reserve Bank Issue Offices as indicated in para 9 below.
The definition of 'counterfeiting' in the Indian Penal Code covers currency notes issued by a foreign government authority as well. In case of suspected foreign currency note received for opinion from the police and government agencies, etc., theyshould be advised to forward the case to the Interpol Wing of the CBI, New Delhi after prior consultation with them.
Para 5 Detection of Counterfeit Notes - Training of Staff
It is necessary to ensure that the cash handling staff in bank branches, currency chests, and treasuries / sub-treasuries is fully conversant with the security features of a banknote.
With a view to educating the branch staff on detection of counterfeit notes, the design and security features of all the banknotes shown in Annex VI have been supplied to all the banks / treasuries with instructions to display them prominently at the branches for information of the public. Posters of the 2005-06 series of banknotes have also been supplied to bank branches for display at the branches. Posters of the 2005-06 series are also available for download in http://www.paisaboltahai.rbi.org.in.
The Controlling Offices / Training Centres shouldalso organise / conduct-training programmes on the security features of banknotes for members of staff to enable detection of counterfeit notes at the point of receipt itself. If necessary, they may take assistance from the nearest Issue Office of Reserve Bank.
Para 6 Examination of the Banknotes Before Issuing over Counters, Feeding ATMs and Remitting to Issue Offices of the Reserve Bank
All the banks shouldensure that all notes in the denomination of Rs.100 and above are processed through machines conforming to 'Note Authentication and Fitness Sorting Parameters' prescribed by Reserve Bank from time to time, before issuing them over the counters or through ATMs.
All bank branches having average daily cash receipts between Rs.50 lakh and above shall use such machines.
In order to obviate complaints regarding receipt of counterfeit notes through ATMs, and to curb circulation of counterfeits, it is imperative to put in place adequate safeguards/checks before loading ATMs with notes. The Government of India and the National Security Council have taken a view that dispensation of counterfeit notes through the ATMs would be construed as an attempt to circulate the counterfeit notes by the bank concerned.
Detection of counterfeits in chest remittances is also liable to be construed as wilful involvement of the chest branches concerned in circulating Counterfeit Notes and may attract special investigation by police authorities, and other action like suspending the operation of the chest concerned.
Reserve Bank may consider the option of levying higher penal interest/penalties for the amount of forged notes detected in the chest remittances from the date of last removal of soiled notes from the respective chests /during inspection.
Para 7 Establishment of Forged Notes Vigilance Cell at Head Office of Bank
Each bank shall establish at its Head Office, a Forged Note Vigilance Cell to undertake the following functions:
Dissemination of instructions issued by the Reserve Bank on counterfeit notes to bank’s branches.Monitoring the implementation of these instructions.Compilation of data on detection of counterfeit notes, and its submission to Reserve Bank and FIU-IND as per extant instructions.Follow-up of cases of counterfeit notes, with police authorities / designated nodal officer.
Sharing of the information thus compiled with bank’s CVO and report to him / her all cases of acceptance / issue of counterfeit notes over the counters.
Conducting periodic surprise checks at currency chests where shortages/ defective /counterfeit notes etc. are detected.
Ensuring operation of Note Sorting Machines of appropriate capacity at all the currency chests and closely monitoring the detection of Counterfeit Notes at currency chest branches and maintaining the record of the same.Ensuring that only properly sorted and examined banknotes are fed into the ATMs / issued over the counters and to put in place adequate safeguards, including surprise checks, both during the processing and in transit of notes.
Forged Note Vigilance Cell shall submit status report on a quarterly basis covering the aforesaid aspects to the Chief General Manager, Department of Currency Management, Reserve Bank of India, Central Office, Amar Building, Fourth Floor, Sir P. M. Road, Fort, Mumbai 400 001, and to the Issue office of the Regional office of Reserve Bank under whose jurisdiction the FNV Cell is functioning, within a fortnight from the conclusion of the quarter under report.
In order to updatethe record of the addresses of the Forged Note Vigilance Cells, the bank shall furnish by e-mail, in the prescribed proforma (Annex III), the address etc. particulars to the Reserve Bank every year, as on 1st July.
Para 8 Provision of Ultra-Violet Lamp and Other Infrastructure
With a view to facilitating the detection of counterfeit notes, all bank branches / treasuries should be equipped with ultra-violet lamps / other appropriate equipments. All currency chest branches should be equipped with verification, processing and sorting machines and should be used to their optimum capacity. Such machines should conform to the guidelines on 'Note Authentication and Fitness Sorting Parameters' prescribed by the Reserve Bank in May 2010.
The banks shall maintain a daily record of the notes processed through the Note Sorting machines, including the number of counterfeits detected.
The banks shouldalso consider providing other branches with verification, processing and sorting machines of appropriate capacity for segregating soiled and suspected banknotes from bulk receipts as also at least one counting machine (with dual display facility) for public use at the counter.
Para 9 Reporting of Data
I By Bank Branches
Data on counterfeit notes detected by all the branches of the bank shall be reported in the prescribed format, on a monthly Basis A statement (Annex IV) - showing the details of counterfeit notes detected in the bank branches during the month shall be compiled and forwarded to the Issue Office of Reserve Bank concerned so as to reach them by 7th of the next month.
Bank branches need not report the data to NCRB as was being done so far.
Principal Officers of banks are also required to report information on cash transactions where forged notes have been used as genuine note to The Director, FIU-IND, Financial Intelligence Unit- India, 6th Floor, Hotel Samrat, Chanakyapuri, New Delhi-110021, within seven working days.
A “nil “report may be sent in case no counterfeit has been detected during the month.
II By Forged Note Vigilance Cell of Bank
Forged Note Vigilance Cell set up at the Head Office of the bank (other than Cooperative and Regional Rural Banks) shall submit a monthly Return reflecting data on banknotes processed (` 100 and above), counterfeit notes detected by the bank, on an all-India basis in a prescribed proforma (Annex V) before the end of the succeeding month, by e-mail to the Department of Currency Management, Reserve Bank of India, Central Office. No hard copy need be sent.
A "nil" report may be sent in case no counterfeit has been detected during the month.
III By Co-operative Banks and Regional Rural Banks
Data on Counterfeit Notes detected by branches of Co-operative Banks and Regional Rural Banks should be furnished on monthly basis to the respective Issue Office of Reserve Bank (Annex IV).
Data on an all-India basis should be compiled at the Head Office of the bank on a monthly basis in Annex V and furnished to the Reserve Bank of India only when called for.
Para 10 Preservation of Counterfeit Notes Received from Police Authorities
All Counterfeit Notes received back from the police authorities/courts may be carefully preserved in the safe custody of the bank and a record thereof be maintained by the branch concerned. Forged Note Vigilance Cell of the bank shall also maintain a branch-wise consolidated record of such Counterfeit Notes.
These Counterfeit Notes at branches should be subjected to verification on a half-yearly basis (on 31st March and 30th September) by the Officer-in- Charge of the branch concerned. They should be preserved for a period of three years from the date of receipt from the police authorities.
They may there after be sent to the concerned Issue Office of Reserve Bank of India with full details.
Counterfeit notes, which are the subject matter of litigation in the court of law should be preserved with the branch concerned for three years after conclusion of the court case.