Paper Money

India’s bank note woes continuing with more counterfeits

The Reserve Bank of India reports increased sightings of counterfeit 2,000-rupee notes in circulation. Shown is a collage of genuine notes.

Image courtesy of the Reserve Bank of India.

Indian Prime Minister Narendra Modi’s disastrous decision in 2016 to demonetize the 500- and 1,000-rupee bank notes and introduce new 500- and 2,000-rupee notes in their place to fight corruption, the underground economy, and counterfeiting continues to plague the country.

Instead of reducing counterfeiting, the Reserve Bank of India’s annual report says that fake notes in 2021 and 2022 have increased compared to a year earlier, with 6.9% of the counterfeits detected at the central bank and 93.1% at other banks. The increase in fake 500-rupee notes was 101.9%, while it was 54.6% for the 2,000-rupee notes.

Compared to the previous year, increases for the other denominations were 16.4%, 10-rupee notes; 16.5%, 20-rupee notes; and 11.7% for the 200-rupee notes. The counterfeit notes detected in the denominations of 50 rupees and 100 rupees declined by 28.7% and 16.7%, respectively. (The 100-rupee note is worth about $1.29 in U.S. funds, and notes of that denomination and smaller are hardly worth counterfeiting.)

The revelation of increased counterfeit reports led Congress Party leader Rahul Gandhi to say, “The only unfortunate success of Demonetization was the TORPEDOING of India’s economy.”

But India’s Express News Service implies that no one should worry, because the “Reserve Bank of India (RBI) is making its fresh banknotes counterfeit-proof,” and a panoply of new security features will be added when the bank starts printing new bank notes.

For example, it says, instead of one, four different types of security threads will be introduced when new suppliers are awarded contracts. Other features will include color-shifting ink for high- and middle-denomination notes, a foil patch, three types of security fibers, micro-perforations, and paper and ink-based physical and chemical markers.

India’s huge size and enormous demand for bank notes leaves no shortage of interested contractors. Among bidders for the security thread feature are Optaglio Ltd. (Czech Republic), Fedrigoni SpA (Italy), Papierfabrik Louisenthal GmBH (Germany), Hueck Foilen GmbH (Austria) and Crane & Co. Inc. (United States).

GleitsMann Security Inks (Germany), and SICPA SA (Switzerland) have bid for the color-shifting ink feature.

Other firms expressed interest in various other aspect of the tender. They include Leonhard Kurz Stiftung & Co KG (Germany), Honeywell International Inc., De La Rue, Bundes Druckerei, Komsco (South Korea), Landqart AG, Oberthar Fiduciaire SAS, Goznak, Keit Ltd (Bulgaria), Stardust Materials LLC (United States) and Woollard & Henry Ltd. (UK).

The process has been going on for years. Bids were opened on Sept. 1, 2017, but, as Express News Service says, “physical inspections of the foreign suppliers could not happen due to various reasons.”

There are rumors of another significant change. Several Indian media outlets are reporting that Mahatma Gandhi may soon lose the distinction of being the only person portrayed on the currency. The Reserve Bank of India was said to be considering placing of Nobel laureate Rabindranath Tagore and 11th Indian president APJ Abdul Kalam on some denominations. This would be the first time the bank is contemplating using images of anyone other than Gandhi on its bank notes. The Reserve Bank of India issued a statement denying any changes.

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