Government agencies play a cat-and-mouse game with counterfeiters to keep out fake notes
Less than 20 days after Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1,000 currency notes and introduced the new purple-pink notes, Telangana police recovered fake Rs 2,000 notes of a total face value of Rs 2.29 lakh. Though they were all crude photocopies, the intelligence agencies were alerted that counterfeiters, largely from across the border, would not give up.
Including the first seizure from Rangareddy district in Telangana, security agencies have so far made 19 recoveries from different parts of the country. Worryingly, the quality of fake notes is only getting better. From amateurish attempts of photocopying the notes to the improved version, where the counterfeiters have managed to copy 11 out of 17 security features, the quality of fake notes, or FICN (Fake Indian Currency Notes) as they are called, seem to have improved. Even the quantity of fake notes that is finding its way into India has been steadily going up.
From a few thousands to lakhs and then to Rs 4 crore—the latest recovery from Rajkot in Gujarat on March 3—the amount of fake notes being smuggled into India has been rising. Though the enforcement and intelligence agencies are on a high alert, they say there is no need to ring the alarm bells—not yet. Some features—the Ashoka Pillar emblem, ‘Rs 2000’ with the rupee symbol, Swachch Bharat logo, Mangalyaan image and the denomination in Devanagari numerals—may have been copied, but investigators say that can be done easily with a high-quality scanner and printer, while high-end security features are intact and not likely to be breached.
Government sources tell Outlook they are not taking any chances and doing whatever they can to stop the inflow of fake notes. Minister of state for finance Arjun Ram Meghwal reiterates that the fake notes recovered post-demonetisation are not of high quality. He told Rajya Sabha in a written reply on March 28 that the government intends to stay ahead of the counterfeiters by regularly upgrading the security features. “Incorporating new security features or new designs in the bank notes to stay ahead of the counterfeiters is an ongoing process,” he said, adding that banknotes in the Mahatma Gandhi (New) series have already been introduced in the denomination of Rs 500 and Rs 2,000 to check counterfeiting.
Original minting of fake notes does not seem to have started yet, say investigators. All the notes recovered so far have the same serial number, implying they are just copies, although high-quality scanners and printers have been used. It could take two or three years for the counterfeiters to copy the superior security features of the new notes. “By then, the government would have upgraded the security features many times over,” says a senior bureaucrat in the finance ministry. “It is a matter of prestige for the government. Members of the Opposition, many of whom were against demonetisation, are just looking for a minor glitch to pounce on the government.”
In the earlier series of notes, Pakistan had managed to visually imitate up to 90 per cent in design. “The quality was so good, down to the feel and the rustle of the paper, that the fake notes could not be detected with naked eye,” says the bureaucrat. “Intelligence inputs now reveal that most Pakistan-based syndicates dealing in FICN have either closed their networks or moved to narcotics, a challenge that needs to be dealt with at another level.”
While the printing of fake notes may have stopped in Pakistan, investigations so far have revealed that most of the better-quality notes are being printed on stamp paper from Bangladesh and ink supplied by Pakistan. “This shows a change in the trend,” says an officer, who is investigating FICN cases. “The notes used to be printed in Pakistan—even in their official mints—and smuggled into India through Bangladesh. Some were sent via the Nepal route too, but that was more or less blocked due to enhanced security. Now, it seems high-value fake notes are being printed in Bangladesh with Pakistan’s help.”
The National Investigation Agency (NIA), which handles cases of terror-financing and FICN, got three fake Rs 2,000 notes forensically examined at the Currency Note Press in Nashik. The NIA had recovered these notes from Firoz, who was wanted in an earlier FICN case of 2015 and was arrested from Malda district in West Bengal on February 14. The forensic examination revealed that the paper used for printing was probably official stamp paper used in Bangladesh. According to the report accessed by Outlook, “The paper used for counterfeiting these notes bears some other watermark and has the lettering in Bangla script, which reads as ‘Prajatantri Bangladesh’. Hence this paper may be pertaining to some security document of Bangladesh.”
Regarding the presence of the security thread, the report says, “Thread not present, but it is imitated by foil stamping technique and done over printing on it to create window pattern. It is partly embedded on front and fully embedded on back.” As per the report, the paper is also a little thicker than the real note. Whether the quality of fake notes is indeed improving will be known after the forensic examination of notes seized subsequently in Malda, with a total face value of Rs 3.90 lakh. The case registered at English Bazar in Malda was transferred to the NIA on March 28 and the investigating agency is in the process of getting the notes forensically examined.
While Bangladesh, which was earlier only a conduit, has emerged as a source of FICN, Malda is the entry point. Malda had been the biggest hub for currency runners earlier too, but the trade had completely stopped after demonetisation. Sources in intelligence agencies say attempts are being made to revive the once well-entrenched trade.
The problem, according to them, is the long porous border India shares with Bangladesh. Malda shares a 220-km border with Bangladesh, of which only 150 km is fenced. “Some portion of Indo-Bangladesh border in Malda district is unfenced due to low-lying or riverine areas, pending land acquisition etc.,” minister of state for home Kiren Rijiju told Rajya Sabha in a written reply on March 22, adding that the government has decided to plug the gaps on the border by means of “physical and non-physical barriers”.
Meghwal too underscored the need for India-Bangladesh cooperation in his response in Parliament, saying that a memorandum of understanding had been signed between the two countries to prevent and counter smuggling of fake notes into the country. Sources in the security establishment say Bangladesh is “more than cooperating” and being very helpful.
In addition, the government has set up a special Combating Financing of Terrorism cell in the Ministry of Home Affairs to coordinate with the central intelligence and enforcement agencies as well as state law enforcement agencies for an integrated approach to tackle the menace of FICN. A Terror Funding and Fake Currency Cell has also been constituted in the NIA. Other enforcement agencies, including the Income Tax Department and Directorate of Revenue Intelligence (DRI), have also been asked to be alert to FICN smuggling.
The DRI had recently conducted raids at various ports on being tipped off about large consignments of fake notes reaching the Indian shores in freight containers. That may have been a red herring, but the government believes in the need to keep fighting against terror-funding, smuggling and circulation of fake currency.