Master Circular on Counterfeit Note Detection and Impounding

What changed

This 2013 master circular updates the 2012 version by incorporating all instructions issued up to June 30, 2013. It consolidates existing rules on counterfeit note handling without introducing new policy changes.

What it means for you

Banks must ensure counterfeit notes are detected only at back offices or currency chests, not at counters. Failure to impound fakes is treated as willful involvement in circulating counterfeit currency, attracting penalties under RBI directive. This reinforces the need for robust verification processes and staff training.

What banks were required to do at the time

• Verify all banknotes at back offices or currency chests using machines, then manually check suspect notes.
• Never return or destroy counterfeit notes; impound them with proper stamping and recording.
• Display notices at branches informing the public that no acknowledgment will be given for impounded notes.
• Report detected counterfeit notes to police and other authorities as per RBI guidelines.
• Ensure all staff handling cash are trained on counterfeit detection and impounding procedures.

Who it affects

All commercial banks (public, private, foreign), Cooperative banks and Regional Rural Banks, Treasuries and sub-treasuries, RBI issue offices