What changed
The RBI updated the previous year's Master Circular (dated April 1, 2021) by incorporating all instructions issued up to April 1, 2022. The updated circular is now available on the RBI website, consolidating operational directives on counterfeit note handling.
What it means for you
Banks must ensure all over-the-counter and bulk tender notes are machine-verified for authenticity. Counterfeit notes must be stamped, impounded, and never returned to the tenderer; failure to do so is treated as wilful involvement in circulating fakes, attracting penalties. Banks must also issue receipts to tenderers and report detections to police as per prescribed procedures.
What you must do
- Update your internal SOPs to align with the latest Master Circular on counterfeit note handling.
- Ensure all branches and currency chests use machines to examine every note tendered over the counter or in bulk.
- Train staff on the correct stamping, impounding, and receipt issuance procedures for counterfeit notes.
- Set up or review your Forged Notes Vigilance Cell (FNVC) at head office and designate a nodal officer.
- Submit monthly reports to RBI and consolidated reports to police as per the circular's annexures.
Who it affects
All scheduled commercial banks, Currency chest operators, Bank branch staff handling cash, Bank compliance and vigilance departments
What should a bank do if a customer tenders a counterfeit note at the counter?
The note must be machine-checked, stamped 'COUNTERFEIT NOTE', impounded, and recorded in a register. An acknowledgement receipt must be issued to the tenderer, even if they refuse to sign it. The note cannot be returned or destroyed.
What are the penalties for not impounding a detected counterfeit note?
Failure to impound is considered wilful involvement in circulating counterfeit notes, and the RBI will impose penalties on the bank.
How should banks report counterfeit note detections to the police?
For up to four counterfeit pieces in a single transaction, a consolidated monthly report must be sent to the police. For larger numbers, immediate reporting is required as per the circular's annexures.