The Reserve Bank of India’s (RBI) Annual Report for the financial year 2024-25 has revealed some significant trends related to counterfeit currency detection in the banking system. Among the most concerning findings is the sharp increase in counterfeit currency notes of the Rs 500 denomination, which rose by over 37 percent on a yearly basis, reaching a total of 1.18 lakh pieces during FY25. This is the highest count among all currency denominations detected for fake notes in the same period.

To put this increase in perspective, the previous financial year (FY24) recorded 85,711 pieces of counterfeit Rs 500 notes. The jump to 1.18 lakh pieces in FY25 underscores the rising challenge of counterfeiters targeting this denomination. The Rs 500 note remains one of the most widely circulated denominations in India, making it a prime target for counterfeiters aiming to infiltrate fake currency into the system.

Counterfeit Currency Across Denominations

Besides the Rs 500 note, the RBI report also highlights the presence of counterfeit notes in other denominations:

• Rs 100 notes accounted for 51,069 pieces detected during FY25.

• Rs 200 notes saw 32,660 pieces caught as counterfeit.

• Rs 2,000 notes, despite being discontinued from printing since September 30, 2023, had 3,508 pieces detected in FY25.

While the counterfeit Rs 500 notes saw a sharp rise, the overall number of counterfeit notes detected in the banking system decreased slightly in FY25, standing at 2.18 lakh pieces, compared to 2.23 lakh pieces in FY24. This indicates a mixed trend where some denominations, like Rs 500, are seeing increases, while the total volume of fake currency is marginally down.

Detection Points and RBI Oversight

The report notes that a vast majority of the counterfeit notes—95.3 percent or 2.07 lakh pieces—were detected at banks, with the remaining discovered at the RBI. This reflects the frontline role banks play in intercepting fake currency notes before they circulate widely in the economy.

Historical Trends and Surges in Fake Currency

A significant historical context was provided by Union Minister of State for Finance, Pankaj Chaudhary, through a parliament paper. He pointed out that there had been a 300 percent jump in counterfeit Rs 500 notes detected in the banking system between FY 2018-19 and FY 2023-24. This indicates that counterfeiters have intensified their activities targeting the Rs 500 denomination over the last several years.

To illustrate:

• In FY 2018-19, counterfeit Rs 500 notes detected were approximately 21,865 pieces.

• By FY 2023-24, this number rose dramatically to 85,711 pieces.

The sharpest annual rise happened in FY22 when counterfeit Rs 500 notes more than doubled from 39,453 pieces in FY21 to 79,669 pieces in FY22—an increase of 102 percent in a single year. This spike indicates the fluctuating nature of counterfeit note detection, likely influenced by enforcement actions, technological advances in currency security, and criminal tactics.

Similarly, Rs 2,000 denomination notes, which were discontinued from printing after September 2023, showed a 166 percent increase in counterfeit detection during FY24, climbing from 9,806 pieces in FY23 to 26,035 pieces. This suggests that despite the printing halt, counterfeit Rs 2,000 notes remain in circulation and continue to pose a risk to the currency system.

Implications and Challenges

The rising number of counterfeit Rs 500 notes highlights the ongoing challenges faced by RBI and Indian law enforcement agencies in combating fake currency circulation. Rs 500 notes, being a key denomination, are widely used for daily transactions, making the impact of counterfeit currency substantial on economic transactions and financial security.

The data also underscores the importance of continuous currency verification, bank vigilance, and public awareness to curb the spread of fake notes. Financial institutions and regulatory bodies need to employ advanced detection technologies and rigorous checks to ensure the integrity of the currency system.

RBI’s Role and Public Awareness

The RBI, through its periodic currency redesigns, enhanced security features like micro-text, latent images, and optically variable ink, has aimed to deter counterfeiters. However, the persistence of fake notes, especially in the Rs 500 and Rs 2,000 denominations, indicates the need for greater vigilance and updated technologies.

Public awareness campaigns on identifying fake notes, encouraging people to report suspicious currency, and promoting the use of digital payments are crucial steps in reducing the circulation of counterfeit money.

Conclusion

The RBI Annual Report 2024-25 paints a complex picture of counterfeit currency trends in India, with a noteworthy increase in counterfeit Rs 500 notes, which topped the list of fake currency denominations. While overall counterfeit notes saw a slight decline, the surge in Rs 500 and historical spikes highlight the continuous threat posed by counterfeit currency to India’s financial system.

Effective measures involving banking vigilance, regulatory oversight, law enforcement, and public awareness will be key to combating this ongoing challenge.

The Upcoming IPOs in this week and coming weeks are 3B Films, Victory Electric Vehicles International, Wagons Learning.

The Current active IPO are N R Vandana Tex Industries, Scoda Tubes, Neptune Petrochemicals, Blue Water Logistics, Astonea Labs, Nikita Papers, Prostarm Info Systems.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.