Countering the counterfeit currency
N. MANOHARAN
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During 2006-09, 7.34 lakh of Rs. 100 notes, 5.76 lakh of Rs. 500 notes and 1.09 lakh of Rs. 1000 notes, all fakes, were seized Effective cooperation among the agencies concerned is essential to address the threat
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The magnitude of counterfeit currency in India is immense. The Naik Committee, appointed to assess the menace of fake currency, estimates the total amount of counterfeit money in circulation in India to the tune of Rs 1,69,000 crore. According to Government figures, during 2006-09, 7.34 lakh of Rs. 100 notes, 5.76 lakh of Rs. 500 notes and 1.09 lakh of Rs. 1000 notes, all fakes, were seized.
Fake notes principally originate from Pakistan, but are smuggled through various routes. The most popular among them are via the UAE, Nepal and Bangladesh. Fake notes from Dubai are transported through air with the help of bonafide passengers or couriers. Thailand, Malaysia, Myanmar and Sri Lanka are also used as transit points. International airports in Bangalore, Chennai, Calicut, Cochin, Hyderabad, Mangalore, Mumbai and New Delhi are identified as the main landing points. Porous and weak land borders with Nepal and Bangladesh are utilised by organised gangs to smuggle counterfeits into India. Once smuggled, the fake money is exchanged for original notes on roughly 2:1 ratio.
It has become increasingly difficult to distinguish between fake and real notes mainly due to the use of state of the art technology and security paper that is made available only to state actors. This clearly indicates the involvement of government agencies in the neighbourhood. Pumping fake currencies is one of the sub-conventional warfare strategies pursued by Pakistan against India.
Given the complexity, a multi-pronged approach is required to counter the menace.
*To stay ahead of counterfeiters, the Reserve Bank should constantly upgrade both paper-based and print-based security features of the Indian currency. The public should be educated on these to enable them to easily distinguish the fake from real notes. Note-sorting machines should be installed at all bank branches to promptly detect fake notes.
*More use of credit/debit cards and online/digital transactions should be encouraged instead of cash transactions.
*Effective cooperation among the agencies concerned is essential to address the threat. While the CBI is the nodal agency for coordinating and monitoring fake currency cases, the other bodies are the Department of Revenue Intelligence, the National Crime Records Bureau, the Central Economic Intelligence Bureau, the Central police organisations, Intelligence agencies, the RBI, the Enforcement Directorate, the Financial Investigation Unit, and the Department of Legal Affairs and the State police. A holistic response should be formulated to avoid contradictions and effective sharing of real time intelligence among them.
*External dependence on security paper and ink should be reduced by increasing indigenous production. Since most of the currency printing paper and inks are being imported from Europe, the European Union should be asked to keep a tight watch on importers of currency-related printing paper and ink based in Pakistan. New Delhi also should press relentlessly through Interpol for extradition of those criminal elements involved in the fake currency racket based in foreign countries.
*India should offer to train Nepalese and Bangladeshi customs and immigration officials to identify and keep a watch over frequent travellers to Dubai, Dhaka, Colombo and other neighbouring countries.
(The author is Senior Fellow, Centre for Land Warfare Studies, New Delhi.)
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