Will you be arrested if fake bank notes are recovered from you? RBI latest direction 2024

Will you be arrested if fake bank note is recovered from you? 

Often, the question is asked by a common person that “will I be arrested if fake bank notes are recovered from me? The answer is simple, No, as mere possession of a forged note does not attract punishment. 

The printing and/or circulation of Fake Indian Currency Notes is an offence under Sections 489A to 489E of the Indian Penal Code. The maximum prescribed punishment is fine of varying degree coupled with imprisonment for life, or with imprisonment for a term which may extend to ten years.

A counterfeit bank note or fake note is any note which does not possess the characteristics of genuine Indian currency note. A forged note can be identified on the basis of the security features which are present in a genuine Indian currency note. These features are easily identifiable by seeing, touching and tilting the note.

According to RBI, mere possession of a forged note does not attract punishment. Possession of any forged or counterfeit banknotes, knowing or having reason to believe the same to be forged or counterfeit and intending to use the same as genuine or that it may be used as genuine, is punishable under Section 489C of Indian Penal Code, 1860 

Detection of Counterfeit Notes – Reporting to Police and other bodies

The following procedure has been prescribed for banks to be followed on detection of Counterfeit Note to the Police.

(i) For cases of detection of Counterfeit Notes up to four (04) pieces in a single transaction, a consolidated report shall be monthly sent by the Bank to the police.

(ii) For cases of detection of Counterfeit Notes of five (05) or more pieces in a single transaction, the Counterfeit Notes shall be forwarded immediately by the Bank to the police for investigation by filing FIR and conduct the necessary investigation.

RBI has issued Master Direction 2024 on Counterfeit Notes, their Detection, Reporting and Monitoring. It provides that in case of detection of Counterfeit Notes, no credit is given to customer’s account. The Counterfeit Notes shall not returned to the customer who tendered them, nor they shall be destroyed by the bank branches. All Counterfeit notes are to be stamped as “COUNTERFEIT NOTE” and impounded. When a banknote tendered at the cash counter of a bank branch / back office and currency chest is found to be counterfeit, an acknowledgement receipt must be issued to the tenderer, after stamping the note. The receipt shall be authenticated by the cashier and tenderer. Notice to this effect shall be displayed prominently at the offices / branches for information of the public. The receipt is to be issued even in cases where the tenderer is unwilling to countersign it.

What to do if you have received a fake bank note from ATM/Bank Branch or any other person.

First of all, one should carefully examine the security features of bank notes received from any person to make sure if they are not fake. However, if any fake note is received the person must immediately refuse it. If fake bank note is received from ATM/Bank, one should immediately inform the police station and the concerned bank branch with proof of receipt of withdrawal. It would help in further investigation by police if carried out in this respect.

It follows that mere recovery of fake currency notes would not lead to automatic arrest, unless there are volumes of fake bank notes. On receipt of fake bank notes of five or more pieces in a single transaction, the bank shall request the police to file a FIR for further investigation. If one can establish the trail of bank notes successfully or even otherwise depending on the facts and circumstances of each case, the police may come to a conclusion absolving you from the offence.

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