Master Circular - Detection and Impounding of Counterfeit Notes

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Master Circular - Detection and Impounding of Counterfeit Notes

RBI/2009-2010/91
DCM (FNVD) No./16.01.05/ 2009-2010

July 1, 2009

The Chairman / Managing Director,
All Commercial / Cooperative Banks / RRBs /
Private Banks / Foreign Banks /
Director of Treasuries of all States

Dear Sir/Madam,

Master Circular – Detection and Impounding of Counterfeit Notes

Please refer to the Master Circular DCM (FNVD) No.G-1/16.01.05/ 2008-09 dated July 1, 2008 consolidating the instructions issued till June 30,2008 relating to detection and impounding of Counterfeit Notes. The Master Circular has been suitably updated by incorporating the instructions issued till date and has been placed on the RBI website www.rbi.org.in.

The Master Circular is a compilation of the instructions contained in the circulars issued by RBI on the above subject which are operational as on the date of this Circular.

Yours faithfully,

(U. S. Paliwal)
Chief General Manager

Master Circular – 2009

CONTENTS

Para No	Particulars
1	Authority to impound Counterfeit Notes
2	Stamping and Impounding of the Counterfeit Note
3	Issue of Receipt to the Tenderer
4	Processing of Counterfeit Notes detected in cash tenders received by bank branch / Treasury - Lodging of FIR
5	Detection of Counterfeit Notes - Training of Staff
6	Examination of Banknotes before Issuing over Counters, feeding ATMs and remitting of Issue Offices of RBI
7	Establishment of Forged Notes Vigilance Cell at Head Office of the bank
8	Provision of Ultra-Violet Lamp and other Infrastructure
9	Reporting of Data - (I) Bank branches (II) FNVC of the bank (III) Cooperative banks & RRBs
10	Preservation of Counterfeit Notes received from Police Authorities
Annex	Annex I
	Annex II
	Annex III
	Annex IV
	Annex V
	Annex VI
	Annex VII

RESERVE BANK OF INDIA
DEPARTMENT OF CURRENCY MANAGEMENT

MASTER CIRCULAR - 2009
Detection and Impounding of Counterfeit Notes

Para 1 Authority to impound Counterfeit Notes

The Counterfeit Notes can be impounded by -
(i) All branches of public sector banks
(ii) All branches of private sector banks & foreign banks
(iii) All branches of co-operative banks & regional rural banks
(iv) All treasuries and Sub-treasuries
(v) All RBI Issue Offices.

Para 2 Stamping and impounding of the counterfeit banknote

Each banknote, which, on examination of various security features / parameters, is determined as a counterfeit one, shall be branded with a stamp "COUNTERFEIT BANKNOTE". For this purpose, a stamp with a uniform size of 5 cm x 5 cm with the following inscription may be used.

COUNTERFEIT BANKNOTE IMPOUNDED
BANK / TREASURY/ SUB-TREASURY
BRANCH
SIGNATURE
DATE

Each such impounded note shall be recorded in a separate Register, under authentication.

Para 3 Issue of Receipt to the Tenderer

When a banknote tendered at the counter of RBI Issue Office or a bank branch or treasury is found to be counterfeit, an acknowledgement receipt in the format as per Annex I should be issued to the tenderer, after stamping the note as in paragraph 2 ibid. The receipt, in running serial numbers, should be in duplicate and should be authenticated by the cashier as well as by the tenderer. Notice to this effect should be displayed prominently at the offices / branches for the information of the public. Acknowledgement receipt may be issued even in cases where the tenderer is unwilling to countersign the receipt.

Para 4 Processing of Counterfeit Notes detected in cash tenders received by bank branch/Treasury -Lodging of FIR

A Counterfeit Note detected in the cash received by the bank branch/Treasury, across the counter shall be impounded in the presence of the tenderer, in the manner detailed in para 2 above. It shall be forwarded to local police authorities for investigation by filing the FIR (Annex II). A copy of the FIR shall be sent to the Forged Note Vigilance Cell constituted at the Head Office of the bank (only in the case of banks), and in the case of the Treasury, it should be sent to the Issue Office of RBI concerned. Particulars such as name, address of the tenderer and his / her statement as to how the said note came into his / her possession shall also be forwarded to police authorities.

FIR is required to be filed in respect of each case of detection of counterfeit note irrespective of the number of pieces and bonafides of the tenderer. Acknowledgement of Police authorities concerned has to be obtained in respect of note/s forwarded to them. If the Counterfeit Notes are sent to Police by insured post, acknowledgement of receipt thereof by the Police should be invariably obtained and kept on record. A proper follow-up of receipt of acknowledgement from the police authorities is necessary. In case of any difficulty faced by the Offices / Branches due to reluctance of the Police to accept FIRs, the matter may be sorted out in consultation with the Nodal Officer of the State concerned.

A list of Nodal Officers of the Central Bureau of Investigation designated to coordinate matters relating to investigation of counterfeit banknote cases is enclosed as Annex VII

In no case, the Counterfeit Notes should be returned to the tenderer or destroyed by the bank branches / treasuries.

The definition of 'counterfeiting' in the Indian Penal Code covers currency notes issued by a foreign government authority as well. The data on detection of counterfeit Indian notes at bank branches & treasuries should be included in the monthly returns forwarded to the RBI Issue Offices as indicated in para 9 below.

In case of suspected foreign currency note received for opinion from police/government agencies, etc., the sender may be advised to forward the same to the Interpol Wing of the CBI, New Delhi after prior consultation.

Para 5 Detection of Counterfeit Notes - Training of Staff

It is necessary to ensure that the cash handling Staff in bank branches / currency chests, and Treasuries / Sub-Treasuries is fully conversant with the security features of a banknote

With a view to educating the branch staff on detection of Counterfeit Notes, the design and security features of all the banknotes shown in Annex VI have been supplied to all the banks / treasuries with instructions to display them prominently at the branches for information of the public.

Posters of the 2000 and 2005-06 series of banknotes have also been supplied to bank branches for display at the branches.

The Controlling Offices / Training Centres may also organise / conduct-training programmes on the security features of banknotes for members of staff to enable detection of Counterfeit Notes at the point of receipt itself. If necessary, they may take assistance of the officers from the nearest Issue Office of RBI.

Para 6 Examination of banknotes before issuing over counters , feeding ATMs , and remitting to Issue Offices of RBI

With a view to ensuring detection of Counterfeit Notes, it is necessary that all the notes received at the branches are carefully examined. Currency Chest branches / other bank branches, which are equipped with Note Sorting Machines (NSMs) should necessarily process all the notes received especially Rs.100 and above denomination. It must further be ensured that in no case, the Counterfeit Notes are mixed up, even inadvertently, in the cash issued to the public or remittances sent to other bank branches / RBI offices.

In order to obviate complaints regarding receipt of Counterfeit Notes through ATMs, and to curb circulation of counterfeits it is imperative to put in place adequate safeguards/checks before loading ATMs with notes. The Government of India and the National Security Council has taken a view that dispensation of Counterfeit Notes through the ATMs would be construed as an attempt to circulate the Counterfeit Notes by the bank concerned.

Detection of counterfeits in chest remittances is also liable to be construed as wilful involvement of the chest branches concerned in circulating Counterfeit Notes and may attract special investigation by police authorities, and other action like suspending the operation of the chest concerned. RBI may consider the option of levying higher penal interest/penalties for the amount of forged notes detected in the chest remittances from the date of last removal of soiled notes from the respective chests /during inspection.

Para 7 Establishment of Forged Note Vigilance Cell at Head Office of the bank

Each bank shall establish at its Head Office, a Forged (Counterfeit) Note Vigilance Cell to undertake the following functions:

Dissemination of RBI instructions on Counterfeit Notes to their branches.
Monitoring the implementation of these instructions.
Compilation of data on detection of Counterfeit Notes, and its submission to RBI , NCRB and FIU-IND as per the extant instructions.
Follow-up of cases of Counterfeit Notes, with Police Authorities / designated nodal officer.
Sharing of the information thus compiled with bank’s CVO and report to him / her all cases of acceptance / issue of Counterfeit Notes over the counters.
Conducting periodic surprise checks at currency chests where shortages/ defective /Counterfeit Notes etc are detected.
Ensuring operation of Note Sorting Machines of appropriate capacity at all the currency chests and closely monitor the detection of Counterfeit Notes at currency chest branches and maintaining the record of the same.
Ensuring that only properly sorted and examined banknotes are fed into the ATMs and to put in place adequate safeguards including surprise checks both during the processing and in transit of notes.

Forged Note Vigilance Cell shall submit a Status Report covering the aforesaid aspects to the Chief General Manager, Department of Currency Management, Reserve Bank of India, Central Office, Amar Building, Fourth Floor, Sir P. M. Road, Fort, Mumbai 400 001, and to the Issue office of the Regional office of RBI under whose jurisdiction the FNV Cell is functioning, on a quarterly basis, within a fortnight from conclusion of the quarter under report.

With a view to updating the record of the addresses of the Forged Note Vigilance Cells, the bank shall furnish by e-mail, in the prescribed proforma (Annex III), the address etc. particulars to RBI every year, as on 1st July.

Para 8 Provision of ultra-violet lamps & other infrastructure

With a view to facilitating the detection of Counterfeit Notes, all bank branches / treasuries should be equipped with ultra-violet lamps. All currency chest branches should be equipped with verification, processing and sorting machines (Note Sorting Machines) of appropriate capacity, and should be used to their optimum capacity, setting software parameters to effectively segregate fit and unfit notes. The banks shall maintain a daily record of the notes processed through the Note Sorting machines, including the number of counterfeits detected. The banks may also consider providing other branches with verification, processing and sorting machines of appropriate capacity for segregating soiled and suspected banknotes from bulk receipts as also at least one counting machine (with dual display facility) for public use at the counter.

Para 9 Reporting of data by bank branches

Data on Counterfeit Notes detected by all the branches of the bank shall be reported in the prescribed format, on a monthly Basis A statement as per Annex IV - showing the details of Counterfeit Notes detected in the bank branches during the month shall be compiled and forwarded to the following offices so as to reach them by 7th of the next month:

(i) Concerned Issue Office of RBI

(ii) Asstt. Director, National Crime Records Bureau, Government of India, Ministry of Home Affairs, East Block-7, R.K. Puram, New Delhi-110 066

Principal Officers of banks are also required to report information on cash transactions where forged notes have been used as genuine note to The Director, FIU-IND, Financial Intelligence Unit- India, 6th Floor, Hotel Samrat, Chanakyapuri, New Delhi-110021, within seven working days.

A “nil “report may be sent in case no counterfeit has been detected during the month

II Reporting of data by the Forged Note Vigilance Cell of the bank

Forged Note Vigilance Cell set up at the Head Office of the bank (other than Cooperative and Regional Rural Banks) shall submit a monthly return reflecting data on Counterfeit Notes detected by the bank, on an all-India basis in a prescribed profoma as per Annex V before the end of the succeeding month, by e-mail to Department of Currency Management, Reserve Bank of India, Central Office on the following address: - dcmfnvd@rbi.org.in

No hard copy need be sent.

A "nil" report may be sent in case no counterfeit has been detected during the month.

III Reporting of data by Cooperative Banks and Regional Rural Banks

Data on Counterfeit Notes detected by branches of Cooperative Banks and Regional Rural Banks should be furnished on monthly basis to the respective Issue Office of RBI as per the Annex IV.

Data on an all-India basis should be compiled at the Head Office of the bank on monthly basis as per the Annex V and furnished to Reserve Bank of India only when called for.

Para 10 Preservation of Counterfeit Notes received from police authorities

All Counterfeit Notes received back from the police authorities may be carefully preserved in the safe custody of the bank and a record thereof be maintained by the branch concerned. Forged Note Vigilance Cell of the bank shall also maintain a branch-wise consolidated record of such Counterfeit Notes. These Counterfeit Notes at branches should be subjected to verification on a half-yearly basis (on 31st March and 30th September) by the Officer-in- Charge of the branch concerned. These Counterfeit Notes should be preserved for a period of three years from the date of receipt from the police authorities.

The Counterfeit Notes may thereafter be sent to the concerned Issue Office of Reserve Bank of India, with full details.

The Counterfeit Notes, which are the subject matter of litigation in the court of law, should be preserved with the branch concerned ,for three years after conclusion of the court case.