Chapter 1 Introduction

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1.1 Introduction about the Study:

The crime of counterfeiting currency is as old as money itself. In the past, nations had used counterfeiting as a means of warfare, such as in the War Between the States in the USA in the mid-1800s and the Bernhard Operation in Europe during the Second World War. The idea was to overflow the enemy's economy with fake banknotes, so that the real value of the said money was reduced; therefore, attacking the economy and general welfare of a society. Today, the crime of counterfeiting continues to present a potential danger to national economies and financial losses to consumers. Recent developments in photographic and computer technology, as well as printing devices, have made the production of counterfeit money relatively easy, thereby increasing the potential threat. Counterfeiting is regarded as an especially serious offence. It strikes at the heart of the political and economic system. Those who fake money are, in effect, challenging one of the most important perquisites of sovereignty, and therefore the foundations of the state itself. Furthermore, anything that seriously destabilizes the currency can threaten national prosperity. It is precisely for this reason that, when states engage in economic warfare with each other, one popular trick has long been to counterfeit each others currency. Counterfeiting, not as a tool of covert statecraft, but merely as a means of making illegal money, in both senses of the term, has a long history, probably as long as money itself. Since paper became the principle medium of exchange in the West, counterfeiting has gone through roughly distinct three stages, each dictated by the state of technology. Indeed, there is probably no other economic crime so conditioned by technological change as currency counterfeiting. The technology almost by itself can determine whether the act is carried out en masse by underground groups who then have complex logistical problems in getting it into circulation, or by opportunists who knock off a few specimens and directly use them. Throughout most of the 19th Century, when individual banks printed their own currency notes, counterfeiting was largely entrepreneurial in nature. A crime of opportunity, it attracted every species of artisan from professional printers to snake-oil salesmen. The lithographic printing techniques were inexpensive and relatively easy to use (though obviously a more skilled printer produced a

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better product), security measures were simple to break, and distribution was not a big deal. The batches of notes tended to be small, and in some cases, counterfeiting was so endemic, merchants actually preferred good counterfeits of the notes of sound and well-known banks to real notes issued by small and relatively unknown banks the fakes were easier to pass. When governments took over a monopoly of the business of printing paper money, the counterfeiting craft shifted. The uniformity of national currencies was itself an impediment to opportunistic incidents. The more familiar the populace was with the notes, the harder to pass fakes; and the better (and therefore more time-consuming and expensive) any successful fakes had to be. Governments also introduced more sophisticated security measures. And, because counterfeiting now threatened the financial integrity of countries, rather than just of this or that financial institution, the effort put into detection was much enhanced. The result was very high capital costs to counterfeiters. Consequently, they required long print runs to cover those costs. Furthermore, the skills required to mimic official notes were difficult to find. Techniques for passing large batches of newly minted paper had to be more sophisticated, usually more long-distance in nature, to evade detection. Therefore, although traditional "organized crime" groups tended to avoid counterfeiting because of both the high risk of detection and visibility involved, success in counterfeiting usually required the efforts of groups with the capital, skills, and connections to pass the product. That remained generally true until the 1980s. During the last two decades, with the spread of new digital print technologies, counterfeiting has again shifted. Although the quality of the end-product is highly variable, the use of scanners, colour printers, and colour copiers mean that counterfeiting is once more a crime of opportunity. Of course, sophisticated groups still do get involved from time to time. As before, they use expensive equipment to simulate intaglio printing, and employ long-distance wholesale distribution networks to move large batches of bills away from the point of production. But more and more instances of counterfeiting are the work of amateurs who print small sums using easy-to-access technology, and directly distribute them into retail trade. So far, although not enough to threaten the integrity of national currencies, at least of the major countries, opportunistic

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counterfeiting is sufficient of a problem to force governments to engage in an ever-more expensive technological arms race against counterfeiters. There are elements of at least two crime categories in counterfeiting that, like so many other criminal activities popularly summarized in a word or simple phrase, are actually a complex of actions. There is intellectual property crime imitating objects of value whose "patent," so to speak, rests with the government. There is market-based crime when gangs sell batches of counterfeit to one another prior to them being distributed to the retail trade. There is, once more, predatory crime when merchants are stuck with fake money accepted in payment for merchandise. There might even be an underground commercial crime when people selling banned or stolen goods find themselves paid off by customers with the same moral standards. There is also another predatory element with respect to government, for fake currency displaces real currency, and therefore pre-empts, though in most countries only to a very marginal degree, the capacity of the government to circulate its own currency and collect the de facto seigneurage. And there are additional security costs governments must swallow to defend the currency. On balance, though, this crime fits best into the predatory category. There are clear victims. Transfers of wealth occur ultimately by deception. Transfers are affected from victim to beneficiary primarily in legitimate cash or goods. There is rarely the need for a business context, even as a front, while only at the wholesale level is there any underground network of transfers involved.

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1.2 Problem statement:

The circulation of counterfeit currency notes in the economy has been considered as one the serious problem in the growth and development of the country. As per the report compiled by the Financial Intelligence Unit (FIU) under the Union Finance Ministry states that during 2010-11 financial year (till March 2011), the agency detected 4,23,539 incidents of Fake Indian Currency Notes (FICN) with a face value of over Rs 35 crores. According to Reserve Bank of India (RBI) and Ministry of finance, most of counterfeit notes are in the denomination of 500 & 1000 and transported in to country through neighbouring countries like Pakistan, Bangladesh and Nepal. Now the most important question is that, how these fake notes entered in to the system. How the neighbouring countries especially Pakistan have accessed the most sensitive thing of the countrys economical structure. As per the sources in the National Investigating Agency (NIA), the recently seized fake notes were most likely printed in state owned printing presses in Karachi and Quetta. Fake currency is also being fed into circulation through sleeper terrorist cells. Much of this fake currency is being smuggled into India through Nepal, Bangladesh, Malaysia and Dubai. While the first two countries have relatively open borders, which further makes the task easy for the smugglers. In addition to this, around 70 % of the paper for printing the currency notes is imported from outside, basically from European countries like Germany, Italy etc. Similar companies are providing paper to Pakistan and other neighbouring countries as well, which further makes difficult to differentiate between the original and fake notes. As the counterfeit notes are spent into circulation, the public will find it has more non-interest-earning cash than it wishes to hold. So it will deposit the excess cash in bank accounts where it adds to vault cash, and thereby increase the aggregate reserves of the banking system. Since banks don't earn interest on cash, they will swap the excess cash for deposits at the Fed in order to lend in the Fed funds market or to purchase interest-earning assets like T-bills. The increase in banking system reserves will create an imbalance in supply and demand and apply downward pressure on the Fed funds rate. In order to maintain control of that rate, the Fed will have to soak up the excess reserves by selling some of its own Treasury securities to the public. Thus perfect counterfeit notes spent into circulation will increase the public's holding of
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Treasury securities, and thereby increase the interest payments due to the public from the Treasury. Now question is that, does the Treasury therefore take the hit? No, that implies the Treasury is a profit-seeking enterprise, no different in that respect from the subway company. The Fed is the source of the government money, and Treasury simply recycles what the Fed has previously issued. Year (As at the end of march) 2001 2002 2003 2004 2005 2006 2007 2008 2009 Notes in circulation (in pieces) 35704 38338 37309 38336 36984 37851 39831 44225 48963 % increase in pieces Notes in circulation (in value) 212460 244655 275096 319761 361227 421911 496138 581598 681113 % increase in value

7.4 -2.7 2.8 -3.5 2.3 5.2 11 10.7

8.3 15.1 12.4 16.2 13 16.8 17.6 17.2 17.1

Source: Reserve Bank of India

As counterfeits and their possibilities multiply and reproduce in all domains of everyday life, some lawful and others unlawful, the postcolonial citizen-subject as consumer and producer develops a new mode of perceiving the world through tactile appropriation, through a habit of knowing and willing, through understanding when to make his presence and absence within the terrain of law, when and how to live in the joy of laws abandonment, and when to be repressed in laws unyielding embrace. A person who would not buy fake drugs or would not use them if he knew them to be so would not hesitate to buy a counterfeit printer cartridge if it were a few hundred rupees cheaper than the original, and would look the other way when his co-passenger in a train bought fake bottled water. A counterfeit consciousness enables him to move back and forth between inclusion and exclusion by agents of state security; to manifest or to recede in the domain of law, or to rest content in the zone of indifference.

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1.3 Counterfeit currency detection techniques:

Over a decade, Indian market is flooded with fake currency. But in last couple of years, there seems to be an increase in the inflow of fake currency from neighbouring countries and now currency notes are closer you than you think. Check your wallet; here are some tips on detecting fake Rs 500 and Rs 1000 notes.

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On the obverse (front) 1. See through registration: In the Middle of the vertical band at the extreme left is the denominational numeral ("500" in Rs 500 and "1000" in Rs 1000) printed as a floral design. One half of this numeral is printed on the obverse and the other half in reverse in such a way that the two printed portions have a perfectly accurate back-toback registration and the numeral appears as one when viewed against light.

2. Identification marks: A circle (Rs 500 note) and diamond (Rs 1000 note) with intaglio print, which can be felt by touch, helps visually impaired to identify the denomination.

3. Watermark: A portrait of Mahatma Gandhi, multi-directional lines and an electrolyte mark showing the denominational numeral ("500" in Rs 500 note and "1000" in Rs 1000 note) appear in this section and can be viewed better when the note is held against light.

4. Optically variable ink: The colour of the numeral in the centre {"500" in Rs 500 note and "1000" in Rs 1000 note) appears green when the note is held flat but changes to blue when it is held at an angle.

5. Intaglio printing: A portrait of Mahatma Gandhi and the seal of Reserve Bank of India at the extreme right, the 'guarantee' and 'promise' clauses in the middle, the emblem of the Ashoka Pillar at the bottom left, the signature of the Governor of Reserve Bank of India below 'promise' clause and the identification mark for the visually impaired persons are all printed in intaglio and can be felt by touch.

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6. Micro lettering: The letters "RBI" and the numeral "500" (in Rs 500 note) and "1000" (in Rs 1000 note) can be viewed with the help of magnifying glass in the area between the Mahatma Gandhi portrait and the vertical band at the right.

7. Latent image: The vertical band above the seal of the Reserve Bank of India contains a latent image of the numeral "500" (in Rs 500 note) and "1000" (in Rs 1000 note) when the note is held horizontally at eye-level.

8. Security Thread: A vertical, 3-mm-wide, security with the inscriptions (" 500 note and " " and "RBI" in Rs

", "RBI" and "1000" in Rs 1000 note) changes colour from

green to blue when viewed from different angles. It will glow yellow on the reverse (back) and the next text will glow yellow on the obverse (front) under ultraviolet light. On the reverse, the thread is visible as an unbroken line when the note is held up against light. Apart from the above mentioned techniques of detecting a fake note, there are many hi tech machines are available in the market like UV lamp etc. with the help of such devices the fake notes can be tracked easily without wastage of time.

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1.4 Objective of the study:

To know about the basic techniques of detecting a fake currency note from the original one. To know how, why and who circulates these fake currencies in to economical framework. To understand the impact of the circulation of these counterfeit currencies on banking and other related financial sector. To know about the peoples awareness and perception about the counterfeit currency notes. Finally last but not least, to know about the measures taken by especially banks and other financial institutions as well as central & state government in order to curb the circulation of counterfeit currencies.

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1.5 Need and Scope of the study:

At times I panic when a shopkeeper refuses to accept a 500-rupee note from me when I do not have notes of other denominations. At that time I usually become shocked and I feel even after knowing I am a banker, he doesnt have trust on me. After facing such kind of incidents, I felt the threat of the presence counterfeit notes in to economy. The circulation of counterfeit currency is not only a serious problem, in fact it has been becoming equally worrisome development is the economic terrorism being unleashed on India by Pakistan and other neighbouring countries by way of pumping into the country huge quantities of fake Indian currency printed in government presses in Pakistan. Though the Indian authorities have all along been aware of the ISIs plan to weaken Indias economy by flooding the country with fake Indian currency, the magnitude and level of sophistication of this operation has shocked the security agencies in India. Till date there is no official data available to show the exact amount of total fake currency presently in circulation in India, but it must be a mind-boggling figure. The menace of fake currency has become such a gigantic problem that the people have now started getting fake currency from the ATMs of nationalised and other banks. Obviously this menace, if remained unchecked, could put our entire economy on the verge of collapse. However its not an easy task to drive out all bad money in just one wash, but it can be curbed or controlled by making people aware about the evil effect of the presence of bad money in to the system. During my survey I observed most of the people from various work class doesnt have adequate knowledge about the basic features of a currency note. It is true, its very difficult to identify a fake note from the bunch of notes, but original is always original; there are some significant aspects of it, on the virtue of which it can be differentiated from counterfeits. Hence by keeping these things in to consideration, its not only need, in fact its necessity to have sufficient knowledge and make others awareness about basic detection techniques of counterfeit currencies.

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1.6 limitations of the study:

The survey was restricted to Angul, Orissa. The sample size of the survey was limited to 50 respondents, and most of the respondents are bankers, so the result will be dominated by their response. The results are totally derived from the respondents answers. There might be a difference between the actual and projected results. Information is partly based on secondary data and hence the authenticity of the study can be visualized and is measurable.

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Chapter 2 Literature Review

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The fake currency racket in India is an age-old problem. Earlier only some criminal gangs and individuals within the country were involved in this racket and its impact on the countrys economy was very marginal. But now direct involvement of neighbouring countries like Pakistan, Bangladesh in this racket has given a new twist and fillip to this menace which has now grown to the extent of assuming the gravest ever threat to the countrys economic stability. As per the report published in DNA dated Feb 8, 2011, huge amounts of counterfeit Indian currency believed to be printed in Pakistan and routed through Nepal and Bangladesh. The value of the fake currency is estimated to be around 9 million. The effects of counterfeit currency are mostly felt on the micro-level when it is circulated from person to person, while on macro-level, flooding an economy with fake currency can cause inflation and devalue the currency being counterfeited. As per the article published in The Sunday Guardian dated May 23, 2012, by Mr. Yatish yadav, around rth of the paper for printing currency notes are imported from outside in order to bridge the demand and supply gap. But at the same time similar companies are providing the same quality of paper to Pakistan & other neighbouring countries which further makes the task easy for the evil forces present in these countries. RBI and related government bodies must consider it seriously, because it is very difficult to differentiate between the notes printed within the country and counterfeit notes. As per the report posted on CNN-IBN dated 3rd March 2011, because of prevalence of an informal economy, India has been becoming a significant target for money launderer and terrorist groups. Criminal networks exchange counterfeit currency for genuine notes, which not only facilitates money laundering, but also represents a threat to the Indian economy. According to an article published in The times of India, Reserve Bank of India is planning to launch a fake currency detection drive throughout the country. For test drive, a joint operation is being planned by Reserve Bank of India (RBI), detection of crime branch and Surat police. In this operation, the concerned authorities will try to catch the culprits with the
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help of closed-circuit cameras installed at several ATMs and branches of various banks. Apart from this, RBI has issued guidelines to all public as well as private sector banks to track the transactions happening between 1st & 12th of every month, as transaction is maximum at banks during these periods. As per the article published in India Today, The average citizen is the worst-hit as fake banknotes have become so deeply embedded in the Indian economy that even bank branches and ATMs are disbursing counterfeit currency. From petrol stations to the local vegetable vendor, everybody is wary of accepting banknotes in denominations of Rs.500 and Rs. 1,000 as a majority of the fake currency notes are almost impossible to tell from genuine banknotes. According to a report posted on Rediff Business, Kores India is mulling to set up a counterfeit currency detector manufacturing unit in India. Priced at over Rs 1 lakh, the detector machine is currently being imported from Swiss-based BEB Industries Electronic AG and can detect 1,200 notes per minute. Its a versatile machine & can detect all the security features in a note and can also be upgraded and calibrated as soon as the apex bank changes the security features. The machine can also detect infra-red pattern, water mark recognition, multiple-head magnetic pattern, security metal thread and other security marks. As per the article published in The Indian Express, in order to tackle the issue of fake currency, Reserve Bank of India has advised banks to ensure that the notes received over the counters are re-circulated only after proper examination through machines; and to streamline their system in a manner which will make them bear the risk of counterfeit bank notes rather than the common man. In addition to this, keeping in view the geographical spread of bank branch network and leveraging technology, RBI has also decided to channelize the distribution of bank notes and coins only through currency chests or bank branches, thus making available the related services closer to customers. According to an article published in India today dated May 25th 2012, India & United States is planning to hold a meeting on the issue of
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tackling the counterfeit currencies in New Delhi. Both countries will share their best practices and put in place the mechanism to detect and track fake Indian currency notes at entry and exit points in the country. In addition to this, the meet would focus on fake notes through setting up of detection machines at the various entry and exit points. The US had already offered India capacity building and sharing technical information in checking counterfeit currency notes. Reserve Bank of India has instructed the all private as well as public sector banks in its recently issued master circular that, Each banknote, which is suspected to be counterfeit or is found to be counterfeit, shall be branded with a stamp COUNTERFEIT BANKNOTE and impounded. The counterfeit banknotes detected in the cash received by the branch shall be forwarded to local police for investigation by filing the FIR. 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. Its one of the remarkable step taken by RBI in order to curb the problem of fake currency notes as once a note is branded as counterfeit it cant be used further.

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Chapter 3 Research Methodology

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3.1 Research Design:

The study is based on survey technique. The study consists of analysis about peoples awareness about the detection of counterfeit currency notes. For the purpose of the study 50 people were picked up at random and their views solicited on different parameters. Most of them were the customers and employees of my bank i.e. Oriental bank of Commerce. The methodology adopted includes: Questionnaire Random sample survey of customers Discussions with the concerned Personal interviews and informal discussions were held when I was interacting with my senior officials and some HNI customers through phone and sometimes personally to ascertain the exiting level of awareness. Further applying simple statistical techniques has processed the data collected.

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3.2 Sources of Data:

Primary data: Collected through the structured questionnaire Secondary data: Through the circulars and magazines published by Oriental Bank of Commerce where I work Through Articles and circulars issued by Reserve Bank of India to all Public as well as private sector banks And finally through web search i.e. through official website of RBI & Banks, through news paper articles and journals etc.

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3.3 Sampling Techniques:

Sampling: Since 100% coverage was difficult within the limited period of time; hence sampling survey method was adopted for the purpose of the study.

Population: Universe

Sample size: A sample size of 50 was chosen for the purpose of the study. Sample consists of basically the employees and Some HNI customers of Oriental Bank of Commerce and other banks

Sampling unit: To define sample unit, one must answer the question that who is to be surveyed. In this project sampling units are as mentioned earlier, the employees and some valuable customer of Oriental Bank of Commerce and other banks

Sampling methods: Since probability sampling requires complete knowledge of all sampling units in the universe which was not possible due to time constraint, so non-probability sampling was chosen for the study

Sampling procedure: From a large number of employees and customers {of Oriental Bank of Commerce and other banks}, sample lot were randomly picked by myself.

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3.4 Tools of analysis:

As far as tools of analysis is concerned for the study, then basically graphical tools of analysis like pie chart, bar chart, scatter diagrams, doughnuts, radars etc has been used. These tools are easy and convenient to use and depicts a clear and perfect picture of analysed outcome on the basis of that further decisions and predictions can be done.

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Chapter 4 Data analysis

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Denomination of counterfeit notes:

40

35

30

25

20

No of Respondents

15

10

0 100 & Below Only 500 Only 1000 Both500 & 1000

Interpretation & Analysis: According to the respondents of the survey, most of the fake notes in the circulation are of denomination of 1000 & 500 and out of both 500 has been considered as most vulnerable. As far as smaller denominations are concerned then, it can be inferred from the above chart that, there are very less chances of counterfeiting of such kind of notes.

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Sources of Counterfeiting:

15%

85%

External sources Internal sources

Interpretation & Analysis: During the survey, it has been found that, most of the people feel, counterfeit notes in to circulation is supplied by external sources. Here external sources basically indicate the infiltrators and evil factors like ISI present in the neighbouring countries. Their main aim is to destabilize the economic situation of India by depreciating the value of rupee. Internal sources are those which are operating within the country but in some way they have link with the external factors. They also play major role in circulation of counterfeit currency.
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Detection techniques:

Security features 30%

Detection tools 70%

Interpretation & Analysis: This was the most interesting part of the survey. Most of the people believe, a fake note can be detected better by using detection tools like UV lamp, Pen detector etc rather than by looking at several security features like watermark, security thread, micro lettering, identification marks etc added by RBI. This is because; the security features added by RBI can be easily copied with the help of high-tech devices, so in that case it can be tracked when it will be kept under detecting tools.

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Relevance of Security features added by RBI:

Neither Relevent nor Irrelevent 8%

Irrelevent 43%

Relevent 49%

Interpretation & Analysis: As mentioned earlier, the sample of the survey consists of basically banks employees & their customers, hence majority of them think the security features added by the RBI are relevant and helps in detecting the fake notes from the bunch of notes, but at the same time around 43% of them feel the security features can be copied with the high-tech devices, so its not relevant in detecting a fake note.

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Affected sector:

40

35 35 30

25

20

No of Responses

15

10 8 5 4 0 Banking & Financial services IT Manufacturing Others 3

Interpretation & Analysis: Whenever the term currency notes comes in to the picture, we cant exclude banking & related financial institution. Same is the case in the above observation. Around 70% respondents said banking is the worst affected sector due to circulation of bad money within the economy. It is because excess of reserves in the currency chest of banks reduces its profit as banks dont earn any interest income by holding cash in its vaults.

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Level of Satisfaction with the existing law against counterfeiting:

Neither satisfied nor Unsatisfied 18%

Satisfied 34%

Unsatisfied 48%

Interpretation and analysis: Around half of the respondents feel the existing laws are not sufficient to curb the menace of counterfeiting of currency. As I observed, they think the existing laws are obsolete and should be upgraded with the time. While on the other hand some people think the existing laws are well enough but it should be implemented properly and if any action is required then it should be taken quickly in order to resolve the matter as soon as possible.

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Awareness level about counterfeiting of currency:

30

25

20

15

10

0 Fully aware Paritally aware Not aware

No of Respondents

Interpretation & Analysis: During the survey its been found that, around 90% of respondents are not aware about how to detect a fake currency note. However some of them know some basic knowledge about the security features added by RBI, but that is not enough as the counterfeiters are copying these features with the help of hightech devices which are not easy to track. It may be because of lack of awareness programme by bank or other related financial institutions. Further all banks & RBI should initiate to educate their customer in order to avoid counterfeiting.

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What can be done to prevent counterfeiting of money:

Familiarize with security features 25 20 15 10 Report any relevent information to info crime 5 0 Verify systematically all the bank notes received

Contact to local police No of respondents

Interpretation & Analysis: AS far the prevention of the counterfeiting of currency is concerned, then most of the respondents feel self defence is the best remedy. In fact it indirectly shows that, when money comes in to the picture, people dont want to take risk, they like to rely on them self by having knowledge of various security features added by RBI and by verifying the currency notes received from the bank or through any other means. There are very less people who opt to report to the local police or other concerned authorities as they believe it may take lot of time in resolving the issue.

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Chapter 5 Findings

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Findings:
The most common denomination of counterfeit notes are of 1000 & 500. Around 95% people in survey responded the same

The evil forces in the neighbouring countries like Pakistan, Nepal, Bangladesh etc are the main supplier of fake notes in to our economic frame work in order to destabilize our economy

As per the respondents of the survey which consists of basically banks employee and customers, money detection tools are much better techniques than detecting a fake note by looking at several security features added to bank notes by RBI.

Banks and other related financial institutions is the most affected sector because of counterfeit currency circulation in the economy as a fake has been found in ATMs of public as well as private sector banks also.

With the increase in copying technologies and easy accessibility to affordable high tech equipments such as desktop publishing systems, scanners, laser printers and colour copiers makes everyone accepting cash, credit cards and other negotiable documents vulnerable to counterfeits

Finally last but not least, as per my observation I found most of respondents including banks employees too are indifferent between fake and original notes

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Chapter 6 Recommendations

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Recommendations:
Banks may ensure the quality of the notes fed in ATMs. They may conduct periodic audit of the agents used for outsourcing this activity viz. the Cash in Transit companies. Banks may switch over to the cassette swap system for feeding the ATMs. New ATMs installed may be provided with in built note detectors. Over a period existing ATMs may also be required to have in built note detectors

Where any person inadvertently in possession of counterfeit notes up to five pieces tenders the same at a bank counter, the requirement of filing FIR should be done away with. A simple report may be filed with the branch which in turn may include this in the Counterfeit Currency Report (CCR) to FIU-IND / RBI

The Reserve Bank of India (RBI) should make some significant changes in the security features in the currency notes at the regular time interval in order to distinguish between the fake notes and proper notes

Banks must explore up-gradation of the security systems in currency chests and cash vaults incorporating electronic bio-metric access, electronic locking of bins, and surveillance through Closed Circuit Television (CCTVs). Networking of CCTVs at chests within the jurisdiction of a controlling office of the bank may be explored for better surveillance

Where deviations and irregularities are found, controlling offices must take immediate punitive action after fixing accountability

Banks both public as well as private sector should educate their customer about the various security features of a currency note
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Conclusion

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Conclusion:
The bank notes in circulation in the country have grown significantly over the years and as one might anticipate, incidence of counterfeit notes has increased too, more so in the recent times. Although the number of counterfeit notes detected in the system would seem insignificant in comparison to the huge volume of the bank notes in circulation, the counterfeiting menace is by no means less daunting. The infiltrators and evil forces present in neighbouring countries like Pakistan, Bangladesh, and Nepal etc. are the main supplier of fake currency within the country. Most of the counterfeit notes detected so far are in the denominations of 500 and 1000. The circulation of counterfeit currency in to the economy increases the aggregate reserves of the banking system which further creates an imbalance in supply and demand and applies downward pressure on the fed funds rate. So in this whole game, the general public takes the hit on the counterfeit notes in approximate proportion to the taxes they pay. However with the development in technology and copying devices, it is not easy to distinguish between a fake note and counterfeit note, but at the same time there are some significant features like watermark, identification marks, micro lettering, security threads etc in a currency note, which separates itself from the counterfeit one. Apart from this, there are several detecting tools are developed like UV lamp, Pen detector etc. which helps in detecting a fake notes from the bunch of notes within lesser time. As mentioned earlier, its a survey based project. So during the survey there were many significant and remarkable things came out as outcome. For example most of the people including the banks employees were not totally aware about the detection techniques of a fake note. Similarly fake notes were also found in the ATMs of the many nationalised banks. The whole banking and related sector is the worst affected with the counterfeit circulation of currency within the economy. So as a bank employee I feel its the need of the hour to make the system effective and dynamic in order to tackle the problem of counterfeit currency circulation. For example the security system in the cash vaults and the existing law and order regarding counterfeiting must be up graded and if there is any deviations or irregularities found, then there should be hard action should be taken after fixing accountability.

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Reference

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Articles & journals:

Counterfeit Consciousness and the Joy of Abandonment, U. Kalpagam India under siege : A wake up call, N. T. Ravindranath, Honorary director, VPMs department of defence and strategic study, Thane Master circular of RBI titled Detection and impounding of counterfeit banknotes Report of RBI on System and procedures for currency distribution Pak ISI sponsored counterfeit currency circulation, B Srinivasulu, SP, Intelligence, Hyderabad Counterfeit Money Who take the hit

Websites:
o www.rbi.org.in o www.dnaindia.com/india/report_huge-amount-of-counterfeit-money-from-pakistancause-for-indian-concern-report_1505148 o www.ibnlive.in.com/news/counterfeit-money-flooding-india-us-report/144985-3.html o www.interpol.int/Public/FinancialCrime/CounterfeitCurrency/Default.asp

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Annexure

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Annexure: 1

-: Questionnaire :-

Name : _________________

Occupation : __________________

Organisation : ____________________

As per you, the most vulnerable denominations of currency notes to counterfeiting : ( ) 100 & below ( ) 500 ( ) 1000 ( ) Both 500 & 1000

According to you, what could be the sources of counterfeit notes : ( ) External sources {outside of country} ( ) Internal sources {within the country}

How much aware you are about the circulation of counterfeit currency: ( ) Fully aware ( ) Not aware
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( ) Partially aware

 What you will do if you get a counterfeit note : ( ) Will stop the transaction & ask for another note and if possible, also the keep the suspected note ( ) Will contact the local police ( ) Will make a note of details of how you received the note ( ) Will give the note only to police & always request a receipt

As per you, which one is the most badly affected sector because of counterfeiting: ( ) Banking & financial services ( ) Manufacturing ( ) Information technology ( ) Others

According to you which one is the most reliable technique for detection of counterfeit notes : ( ) By looking towards securities features added by RBI ( ) Money detection tools

Are you satisfied with the existing laws against counterfeit money making : ( ) Yes ( ) No ( ) Cant say

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 Do the security features added to the bank notes by RBI protect you from counterfeiting : ( ) Yes ( ) No ( ) Cant say

Are you satisfied with the steps taken by your bank in order to prevent from counterfeiting : ( ) Yes ( ) No ( ) Cant say

What can you do to avoid counterfeiting : ( ) Familiarize yourself with security features added by RBI ( ) Verify systematically all the bank notes you receive ( ) Contact to your local police ( ) Report any relevant information to the concerned authorities ( ) If any other then please specify _________________________

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