RBI/2007-2008/29
DCM(FNV ) No.G-1/16.01.05/ 2007-08

July 2, 2007

The Chairman /Managing Director,
All Commercial/Cooperative Banks/RRBs/Private Banks/
Foreign Banks and Director of Treasuries of all States.

Dear Sir/Madam,

Master Circular – Detection and impounding of counterfeit banknotes

Please refer to the Master Circular DCM(FNVD) No. G-48/16.01.01/ 2006-07 dated August 31,2006.consolidating the instructions issued till June 30,2006 relating to detection and impounding of counterfeit banknotes. The Master Circular has been suitably 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.

Yours faithfully,

(U.S.Paliwal)
Chief General Manager

CONTENTS

RESERVE BANK OF INDIA
DEPARTMENT OF CURRENCY MANAGEMENT

MASTER CIRCULAR-2007

DETECTION AND IMPOUNDING OF COUNTERFEIT BANKNOTES

1. Authority to impound counterfeit banknotes

The counterfeit banknotes can be impounded by -
(i) all branches of  public sector banks
(ii) all branches of  private sector banks & foreign banks
(iii) all branches of co-operative banks & regional rural banks
(iv) all treasuries and Sub-treasuries
(v) all RBI Issue Offices.

2. Stamping on the counterfeit banknote

Each banknote, which is suspected to be counterfeit or is found to be counterfeit, shall be branded with a stamp ‘COUNTERFEIT BANKNOTE’ and impounded. For this purpose, a stamp with a uniform size of 5 cm x 5 cm with the following inscription may be used.

3. Issue of Receipt to the Tenderer:

When a banknote tendered at the counter of RBI Issue Office or a bank branch or treasury is found to be counterfeit, an acknowledgement receipt in the format as per  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 may be issued even in cases where the tenderer is unwilling to countersign the receipt.

4. Counterfeit banknotes detected in cash tenders received by the branch

The counterfeit banknotes detected in the cash received by the branch shall be forwarded to local police for investigation by filing the FIR (Annex II). A copy of the FIR  shall be sent to the Forged (Counterfeit) Banknote Vigilance Cell 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 concerned Issue Office of RBI. Particulars such as name, address of the tenderer and his /her statement as to how the said banknote came into his / her possession shall also be forwarded to police authorities. FIRs are required to be filed in respect of all cases of detection of counterfeit banknotes, including one or two pieces detected in cash tendered by individuals whose bonafides are not suspect.  If the counterfeit banknotes are sent to Police by insured post, acknowledgement of receipt thereof by the Police should be invariably obtained and kept on record.  In case of any difficulty, if any, faced by the Offices/Branches due to reluctance of the Police to accept FIRs, the matter may be sorted out in consultation with the Nodal Officer of the State concerned.  A list of Nodal Officers of State Police Forces designated to coordinate matters relating to investigation of counterfeit banknote cases is enclosed as Annex V. In no case, the counterfeit banknotes should be returned to the tenderers or destroyed by the bank branches / treasuries.   In case of suspected foreign currency note received for opinion from police/government agencies,  etc., the sender may be advised to forward the same to the Interpol Wing of the CBI, New Delhi after prior consultation.  The definition of `counterfeiting’ in the Indian Penal Code covers currency notes issued by a foreign government authority as well.   The data on detection of counterfeit Indian banknotes at bank branches & treasuries should be included in the monthly returns forwarded to the RBI Issue Offices as shown in para 9 below.

5. Guidelines on detection of counterfeit banknotes

With a view to educating the branch staff on detection of counterfeit banknotes, the design and security features of all the banknotes shown in Annex IV have been  supplied to all the banks / treasuries with instructions to display them prominently at the branches for information of the public. The Controlling Offices/Training Centres may also organise/conduct training programmes on the security features of banknotes. If necessary, they may take help of the officers from the nearest Issue Office of RBI. 

6. Examination of banknotes

With a view to ensuring detection of counterfeit banknotes, it is necessary that all the notes received at the branches are carefully examined. It must further be ensured that in no case, the counterfeit banknotes are mixed up, even inadvertently, in the cash issued to the public or remittances sent to other bank branches/RBI offices. Banks should ensure that they stock their ATMs with good quality genuine banknotes only. Disbursement of counterfeit banknotes through the ATMs would be treated as an attempt to circulate the counterfeit banknotes by the bank concerned. Further, bank branches / currency chests / treasuries are expected to detect counterfeit banknotes at their end and not to include them in the remittances sent to RBI Offices. RBI may consider the option of imposing penalty for the value of counterfeit banknotes detected in the remittances received from the currency chests from the date of last removal of soiled notes from them.

7. Establishment of Forged Note Vigilance Cell at Head Office of the bank

Each bank shall establish at its Head Office, a Forged (Counterfeit) Banknote Vigilance Cell to undertake the following functions:

(1) To disseminate RBI instructions on counterfeit banknotes to the branches.
(2) To monitor the implementation of these instructions.
(3) To compile the centralised data on monthly basis on the counterfeit banknotes detected at their branches and report the same to RBI & NCRB in the enclosed format (Annex III).
(4) To share the information thus compiled with bank’s CVO and report to him/her all cases of acceptance /issue of counterfeit banknotes over the counters.
(5) To coordinate with the designated nodal officer.
(6) To conduct periodically surprise checks at currency chests where shortages/ defective /counterfeit banknotes etc are detected.
(7) To ensure installation of Note Sorting Machines of appropriate capacity at all the currency chests and closely monitor the detection of counterfeit banknotes at currency chest branches.
(8) To ensure that only properly sorted and examined banknotes are fed into the ATMs and to put in place adequate safe guards both during the processing and in transit of notes.
(9) Steps taken in this regard to be advised to the Chief General Manager, Department of Currency Management, Reserve Bank of India, Central Office, Mumbai 400001 on a quarterly basis, within a fortnight of the next month to which it belongs.

8. Provision of ultra-violet lamps & other infrastructure

With a view to facilitating the detection of counterfeit banknotes, all bank branches/ treasuries may be equipped with ultra-violet lamps.  All currency chest branches should be equipped with verification, processing and sorting machines   already conveyed to banks.  The banks may also consider providing other branches with verification, processing and sorting machines of appropriate capacity for segregating soiled and suspected counterfeit banknotes from bulk receipts as also at least one counting machine (with dual display facility ) for public use at  the counter. 

Banks should put in place a system to impart training to members of staff on detection of counterfeit banknotes at the point of receipt itself.

9. Data compilation and submission of returns

A statement as per Annex III – (modified from the earlier format, incorporating the name of the State/UT where the branch operates) showing the details of counterfeit banknotes detected in the bank branches during the month shall be compiled  and forwarded to the following offices so as to reach them by 7th of the next month :

(i) Concerned Issue Office of RBI
(ii) Asstt. Director, National Crime Records Bureau, Government of India, Ministry of Home Affairs, East Block-7, R.K. Puram, New Delhi-110 066

Annex I

Acknowledgement Receipt to be issued to the tenderer of counterfeit banknotes

(Name of the Bank )

Address of the Bank Branch
 

Serial Number:-                                              

Date:

The note(s) described below received from ………………………………………………………………………………………………………
(name and address of the tenderer)  is/are counterfeit and has/have therefore been  impounded and stamped accordingly.

Sl.No. of the Note                          Denomination           

(Signature of the tenderer )                                                                            (Signature of the counter cashier )

ANNEX- II

Name & Address of the bank branch

Ref. No.                                                                                             Date  :

The Sr. Inspector of Police,
___________Police Station,
_____________________

Dear Sir,

Detection of counterfeit banknote/s - Request for investigation

We enclose the following counterfeit banknotes detected in our office on ________. The name and address of the tenderer together with his statement is furnished.

2. Since the bonafides of the tenderer are suspect he is also being handed over to you. As the printing and/or circulation of forged Indian currency notes is an offence under Sections 489A to 489E of the Indian Penal Code, we request you to conduct the necessary investigation and bring the culprits to book. In case it is decided to file criminal proceedings in the court of law, you may first arrange to send the notes to the General Manager, Bank Note Press, Dewas (Madhya Pradesh) or General Manager, Currency Note Press, Nashik (Maharashtra) for examination. The expert opinion furnished by the Dewas/ Nashik Press may be produced in the court as evidence under Section 292 of the Criminal Procedure Code. The forged notes may please be returned to us after the completion of the investigation and/or proceedings in the court of law along with the detailed report of the investigation/decision of the court.

Details of Counterfeit Banknote/s

Yours faithfully,

Manager/Assistant General Manager

ANNEX-III

Name & Address of the bank branch

Statement showing the details of counterfeit banknotes detected in the branch during the month of _______________

1. Denomination-wise Details

B)  Details of cases filed with police

i) No. of cases pending with police at the beginning of the month _____________
ii) No. of cases sent to police during the month                              ______________
iii) No. of cases returned by the police during the month                ______________                           
iv) No. of cases pending with police at the end of the month         _______________

Forwarded to :-

1. The General Manager/Deputy General Manager, Reserve Bank of India, Issue Department, ____________ 

2. The Assistant Director, National Crime Records Bureau, Government of India, Ministry of Home Affairs, East Block-VII, R.K. Puram, New Delhi-110 066.

(Signature)

Name & Designation of the Authorised Official

ANNEX- V

List of Nodal Officers – State-wise for monitoring FICNs

Banks/Offices may update the names and addresses of Nodal Officers from time to time by directly contacting the State Police authorities.