Demonetisation effect: Banks detected nearly 64% of the 522,783 fake currency in FY18
30 August 2018
During 2017-18, 522,783 pieces of counterfeit notes were detected in the banking system, of which 63.9 per cent were detected by banks other than the Reserve Bank, mainly due to the huge deposits accumulated in banks in the aftermath of the September 2016 demonetisation of the Rs1,000 and Rs500 banknotes, says the RBI.
The total value of Rs500 and Rs1,000 notes, which were banned on 8 November, 2016, was Rs15,417.93 billion, out of which Rs15,310.73 billion was returned. This means that around 99.30 per cent of the banned notes were returned. The value of currency that did not return is far less than what the government expected.
The report said while overall detection of counterfeit notes was 31.4 per cent lower at 522,783 pieces in 2017-18 compared to 762,072 pieces in 2016-17, the number of fake notes of Rs2,000 jumped to 17,929 in fiscal 2017-18 compared to 638 pieces in 2016-17.
Similarly, 9,892 pieces of counterfeit notes were detected in the new Rs500 banknotes in 2017-18 compared to 199 in the previous fiscal.
While the overall fake notes in terms of number of counterfeit notes has come down, the counterfeiting of new Rs500 and Rs2,000 notes, that boast of improved security features, has gone up.
In its Annual Report released on Wednesday, RBI said as much as 99.3 per cent of the junked Rs1,000 and Rs500 notes have returned to the banking system, indicating that just a miniscule percentage of currency was left out of the system after the government's unprecedented note ban aimed at curbing black money.
RBI, however, has taken an awfully long time to count the currency that was returned in the limited period window provided to exchange or deposit the demonetised currency, said the exercise is finally over.
That was because of the need to detect and weed out counterfeit Indian currency circulation in the country.
RBI said detection of counterfeit notes was 31.4 per cent lower than in the previous year. Counterfeit notes detected in SBNs decreased by 59.7 and 59.6 per cent in the denominations of Rs500 and Rs1000, respectively, as the same comprised only the residual part of SBN deposits processed during the year 2017-18, it added.
Compared to the previous year, there was an increase of 35 per cent in counterfeit notes detected in the denomination of Rs100, while there was a noticeable increase of 154.3 per cent in counterfeit notes detected in the denomination of Rs50.
In the Mahatma Gandhi (New) Series of banknotes in the denominations of Rs500 and Rs2,000, counterfeit notes detected during 2017-18 were 9,892 and 17,929 as against 199 and 638, respectively during the previous year.
Out of the total Fake Indian Currency Notes (FICNs) detected, the share of FICNs detected at the Reserve Bank was higher at 36.1 per cent compared to 4.3 per cent during the previous year. This was because of processing of large volume of SBNs withdrawn from circulation.
There were three main objectives behind the banning of Rs 500 and Rs 1,000 notes in November 2016 - curbing black money hoarding, tackling the menace of fake currency and dealing a blow to terror financing. Apart from these, the government also wanted to give push to digital transactions and bring more people into the tax net.
Post-demonetisation, RBI spent Rs7,965 crore in 2016-17 on printing new Rs500 and Rs2,000 and other denomination notes, more than double the Rs3,421 crore spent in the previous year.
RBI said 2016-17 was an exceptional year because of the demonetisation and that the after-effects continued in 2017-18 as well. Accordingly, the indent for 2017-18 was higher by 9.1 per cent as compared to last year. However, the supply of banknotes was lower than that in the previous year, but was noticeably higher compared to the pre-demonetisation year.
The indent and supply of coins during the year was considerably lower as compared to last year with only 5,852 million pieces of coins supplied against an indented quantity of 7,712 million pieces in 2017-18 vis-à-vis 9,691 million pieces supplied against an indent of 15,000 million pieces in 2016-17.
Banknotes under the Mahatma Gandhi (New) Series were launched from November 2016, highlighting the cultural heritage and scientific achievements of the country. During the year, in continuation of the earlier release of banknotes in the denominations of Rs2,000 and Rs500, banknotes of Rs200, Rs50 and Rs10 denominations of the same series were also introduced.