Fake Indian Currency Notes (FICN)

Officials and the media use the term fake Indian currency note (FICN) when referring to counterfeit currency notes that are circulated in the Indian economy. Cash created without the proper authorisation of the governmental body, generally in an intentional attempt to duplicate that currency and defraud the receiver, is known as counterfeit money. Creating or utilising counterfeit money is an act of deception or falsification that is illegal and a punishable offence. Counterfeit currency can be detected using several methods like the photographic method. Money forgery is almost as old as money itself, and we know this from plated copies from the past that have been discovered.

Laws Regulating Counterfeit Currency and Punishment

In India, possessing counterfeit currency is a punishable offence. But it is only regarded as such if the person knows that the notes are fake. When it comes to counterfeit currency, many laws apply because it is not only a crime against the individual holder but also an act of terrorism against the sovereign state and its people.

The Indian Penal Code’s Chapter XII, “Of Offences relating to Coin and Government Stamps,” strictly prohibits and punishes a wide range of counterfeits relating to coins. Section 230 of the chapter defines “coin” and “Indian coin” as a metal stamped and issued by the authority of some state or sovereign power to be used as money. Sections 489A-489E of the Indian Penal Code only deal with counterfeiting of banknotes/currency notes. 

The Unlawful Activities (Prevention) Act of 1967 contains several sections dealing with currency counterfeiting. Section 15 of the Act defines it as a “terrorist act.” The terrorist act also defines the harm done to monetary stability by producing, smuggling, or circulating counterfeit Indian currency.

Reserve Bank of India Circular on Counterfeit Currency

The Reserve Bank of India (RBI) is the sole regulator and primary body in charge of issuing and circulating currency notes in the Indian economy, establishing security measures to detect and impound counterfeit currency notes, and imposing appropriate penalties on defaulting parties. The Reserve Bank of India issued updated guidelines on detecting and impounding counterfeit currency in its master circular, Detection and Impoundment of Counterfeit Notes, dated 01-04-2021, compiling the RBI’s instructions on the subject comprehensively.

The circular requires all banks and treasuries to implement safeguards and control measures to ensure the authenticity of all currency notes presented over the counter, through the chest, or before dispensation through ATMs. It is the responsibility of banks to align their cash management systems in a way that is appropriate enough to secure the flow of money within the banking system by equipping all bank branches and back offices with equipment such as ultraviolet lamps and various banknote sorting and detection machines.

Bodies That Can Impound Counterfeit Currency

All banks, treasuries, sub-treasuries, and RBI issue offices are authorised to impound counterfeit money. All banks must establish a Forged Note Vigilance (FNV) Cell at their headquarters to disseminate RBI instructions to all bank branches, monitor the implementation, conduct periodic checks of measures employed, and compile and submit data and periodic reports to the RBI, Finance Intelligence Unit – India (FIU-IND), and National Crime Records Bureau (NCRB).

Banks must also appoint a Nodal Bank Officer in each district to act as a point of contact between the bank and the police authorities for all counterfeit note-related activities. When you find fake currency by using methods such as the photographic method, you can approach them.

Impact of Counterfeit Currency on the Economy

Counterfeit currency can be viewed as a form of economic terrorism perpetrated by outside sources to harm India’s economy. Economic terrorism is manipulating a country’s economy behind the scenes by state or non-state actors. If, as military theorist Carl von Clausewitz stated, “war is the continuation of policy/politics with other means,” then economic warfare and economic terrorism is war through other means. Terrorist organisations targeting India, for example, would benefit from the printing and distribution of FICN in several ways.

Aside from funding terrorism, counterfeit currency poses other dangers. Inflation is one of them. The circulation of a large amount of counterfeit currency increases the amount of money in circulation, leading to a surge in demand for goods and commodities. Given the multidimensional nature of FICN, fake currency is to be dealt with holistically, and relevant agencies must collaborate.

Conclusion

This article discussed Fake Indian Currency Notes (FICN) or counterfeit currency, the laws that govern them, and how they affect the economy. These days, counterfeit money is being circulated worldwide. While its circulation increases the amount of money available to the public, it has a negative impact on the economy. Producing counterfeit money is a form of forgery or fraud because it is done without legal sanction. It is a punishable offence in all countries of the world.