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Master Direction on Counterfeit Notes Detection and Reporting

Current · Source: Reserve Bank of India · RBI/DCM/2026-27/394 · issued 01 Apr 2026 · ~2 min read
Quick answerRBI has consolidated all existing guidelines on counterfeit notes into a single Master Direction, effective April 1, 2026. Banks must impound all counterfeit notes, issue receipts to tenderers, and report data to RBI, NCRB, and FIU-IND. Non-compliance invites penalties.
The rule, in the simplest words
How it plays out — a real example

A branch operations officer in Indore receives a bundle of ₹2000 notes from a customer repaying a loan. She runs each note through the machine, which flags one note because the security thread color does not shift from green to blue when tilted. She stamps the note as 'Counterfeit', impounds it, and gives the customer a receipt. Later, she logs the incident into the monthly report for RBI.

What changed

RBI has issued a comprehensive Master Direction replacing all previous circulars and master circulars on counterfeit notes. The new directive consolidates and updates instructions on detection, impounding, reporting, and monitoring of counterfeit notes. It also withdraws the circulars listed in Annex IX.

What it means for you

Banks now have a single reference document for all counterfeit note procedures, reducing ambiguity. The emphasis on machine-based detection and strict reporting to multiple agencies (RBI, NCRB, FIU-IND) increases compliance burden. Failure to impound notes is treated as wilful involvement, attracting penalties.

What you must do

Who it affects

All scheduled commercial banks, Currency chests, Bank branches handling cash transactions, Compliance and vigilance departments, Cash management and ATM operations teams

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What happens if a bank fails to impound a counterfeit note?

RBI considers this as wilful involvement in circulating counterfeit notes and will impose penalties. Banks must never return or destroy counterfeit notes.

Do we need to issue a receipt to the person who gave the counterfeit note?

Yes, an acknowledgement receipt in the prescribed format (Annex II) must be issued after stamping the note. The receipt should be in running serial numbers and authenticated by the cashier and tenderer.

Which previous circulars are withdrawn by this Master Direction?

All circulars listed in Annex IX of the Master Direction, along with all earlier Master Circulars and Directions on counterfeit notes, stand withdrawn from April 1, 2026.

📜 Read the original circular — full text as issued by RBI
Issued in the Mahatma Gandhi (New) Series. The base colour of the note is magenta. The note has other designs, geometric patterns aligning with the overall colour scheme, both at the obverse and reverse. See through register with denominational numeral 2000. Latent image with denominational numeral 2000. Denominational numeral २००० in Devnagari. Portrait of Mahatma Gandhi at the centre. Micro letters 'RBI' and '2000' on the left side of the banknote. Windowed security thread with inscriptions 'भारत', RBI and 2000 on banknotes with colour shift. Colour of the thread changes from green to blue when the note is tilted. Guarantee Clause, Governor's signature with Promise Clause and RBI emblem towards right Denominational numeral with Rupee Symbol, ₹2000 in colour changing ink (green to blue) on bottom right. Ashoka Pillar emblem on the right Mahatma Gandhi portrait and electrotype (2000) watermarks. Number panel with numerals growing from small to big on the top left side and bottom right side. For visually impaired Intaglio or raised printing of Mahatma Gandhi portrait, Ashoka Pillar emblem, bleed lines and identity mark. Horizontal rectangle with ₹2000 in raised print on the right. Seven angular bleed lines on left and right side in raised print.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/DCM/2026-27/394 · issued 01 Apr 2026. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
🏦 Branch Manager
  • Ensure all branches use machines to examine notes tendered over the counter and in bulk.
  • Immediately stamp and impound any counterfeit notes, issue acknowledgement receipts to tenderers.
📜 Compliance
  • Update internal policies and training modules to align with the new Master Direction.
  • Designate a nodal bank officer and establish a Forged Notes Vigilance Cell at head office.
  • Submit monthly reports to RBI and half-yearly reports to NCRB and FIU-IND as per new formats.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All scheduled commercial banks, Currency chests, Bank branches handling cash transactions, Compliance and vigilance departments, Cash management and ATM operations teams), your first concrete step on “Master Direction on Counterfeit Notes Detection and Reporting” is: “Update internal policies and training modules to align with the new Master Direction.” (RBI issued this 01 Apr 2026).

  1. Circular: RBI/DCM/2026-27/394 -- Master Direction on Counterfeit Notes Detection and Reporting
  2. Issued: 01 Apr 2026
  3. Action required: Update internal policies and training modules to align with the new Master Direction.
  4. Action required: Ensure all branches use machines to examine notes tendered over the counter and in bulk.
  5. Action required: Immediately stamp and impound any counterfeit notes, issue acknowledgement receipts to tenderers.
  6. Action required: Designate a nodal bank officer and establish a Forged Notes Vigilance Cell at head office.
  7. Action required: Submit monthly reports to RBI and half-yearly reports to NCRB and FIU-IND as per new formats.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 02 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13361&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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