What changed
RBI introduced a 25% compensation for banks on losses from counterfeit notes of ₹100 and above detected and reported. The procedure for detection, reporting, and penalties was reviewed. Banks must start reporting from August 2013 under a new format.
What it means for you
Banks now have a financial incentive to actively detect and report counterfeit notes, shifting the risk from the public to banks. Non-compliance with detection and reporting will attract penalties, reinforcing the need for robust note authentication processes. This aligns with RBI's goal to curb counterfeit circulation and improve data on fake notes.
What you must do
- Ensure all notes of ₹100 and above are processed through authentication machines before re-circulation.
- Immediately impound any counterfeit notes detected and report to RBI and local police.
- Prepare to submit reports to RBI from August 2013 using the prescribed format.
- Review internal procedures to avoid penalties for non-detection or non-reporting.
- Train staff on the new incentive scheme effective July 1, 2013.
Who it affects
All Scheduled Commercial Banks, Regional Rural Banks, Scheduled State Co-operative Banks, Scheduled Primary Urban Co-operative Banks
What compensation do banks get for detecting counterfeit notes?
Banks receive 25% of the loss incurred on counterfeit notes of ₹100 and above that they detect and report to RBI and police authorities.
When does the new scheme take effect?
The instructions are effective from July 1, 2013, and banks must start reporting to RBI from August 2013.
What happens if banks fail to detect or report counterfeit notes?
Non-detection and non-reporting will attract penalties as per existing directives, and failure to impound detected notes may be construed as willful involvement in circulating fakes, leading to penalty imposition.