Madhya Pradesh sees 300% spike in fake currency since demonetisation, but officials deny link with note ban

Bhopal: On 8 November, 2016, the Union government announced that Rs 500 and Rs 1,000 notes would no longer be legal tender. The Centre claimed that the move would diminish the size of the shadow economy by rooting out black money and counterfeit currency used to fund illicit activities, including terrorism.

However, the move to curb the circulation of fake notes seems to have been ineffective in Madhya Pradesh, as the state has seen a 300 percent spike in the counterfeit currency it has seized since demonetisation. In the past 20 months, the Madhya Pradesh Police has seized fake notes worth Rs 1.29 crore in both new and old currency notes.

Representational image. PTI

Representational image. PTI

According to the data provided by the Madhya Pradesh Special Task Force, in around 40 cases of fake rupee notes till August 2018, various state police agencies have seized Rs 1.29 crore in counterfeit currency. Interestingly, in 2015 and 2016, the police  seized much lower amounts in fake notes — Rs 31.73 lakh and Rs 10.76 lakh, respectively. A sum of the two figures, Rs 42.5 lakh, shows that after demonetisation, there was a threefold jump in the counterfeit currency seized in Madhya Pradesh.

Miscreants have been making a mockery of the Union government and Reserve Bank of India's claim that the new currency notes are equipped with latest security features that cannot be faked. They have been printing the new notes at a run-of-the-mill photo studio with the help of high-quality papers, colour printers, photocopy machines and glitter pens.

Of the Rs 1.29 crore counterfeit currency seized, Rs 29 lakh are fakes of the newly-issued notes in denominations of Rs 500 and Rs  2,000. The remaining counterfeit currency worth Rs 1 crore — printed in the denominations of the old notes — were seized by the Indore Police a month ago.

On 18 August, the Indore Police had arrested three people carrying Rs 1 crore in counterfeit denominations of Rs 500 and Rs 1,000. While being interrogated, the accused revealed that they had brought the notes from Aurangabad, though they were procured from a trader in Surat.

In the last 20 months, the Bhopal Crime Branch alone unearthed six to seven fake currency cases, in which the offenders were using photocopies of the notes in one case. The Crime Branch got a major lead on an inter-state racket of fake currency notes being printed. The case was later transferred to Special Task Force (STF).

It is the Crime Branch and other police agencies that mostly deal with cases of fake notes. However, if they get any major leads on inter-state or international connections in a case, they transfer it to STF for it to carry out an in-depth investigation.

The Assistant Superintendent of Police (ASP) of the Bhopal Crime Branch, Rashmi Mishra, said: "There has been no difference in cases of fake currency notes post demonetisation. Although, they (fake currency rackets) photocopy new notes of small denominations and circulate them widely in rural areas, where people don't know much about fake notes."

She added that the rural population gets fooled easily as here, people are under the impression that the RBI and  Government of India are changing the old notes, and that the fake ones they see are really the newly-issued currency.

Data of number of cases and amount of fake currency notes seized
Year No. of cases Total amount (in Rupees)
2015 32 31,73,750
2016 20 10,76,220
2017 23 20,45,710
2018(15 August) 10 7,89,610

(The data excludes Rs 1 crore seized by the Indore Police on 18 August, 2018)

Modus operandi

There are two types of fake currency — printed and photocopied — but the punishment for the two are no different. As much as 80 to 85 percent of fake currency cases are of photocopied notes, while cases of printed counterfeit notes and inter-state smuggling make up 15 percent of the lot.

While being interrogated by the police, an accused admitted that they use hi-tech scanners, photocopy machines, colour printers and glitter pens to give their product a real look and feel. They buy good quality paper, scan the notes and print them using the best colour printers after perfecting them using Photoshop. They then make copies of their finished product using the latest photocopy machine. As the final touch, they use glitter pens to add the security thread (the lines that run along the centre of currency notes).

Recalling one such case, ASP Mishra said: "In one case, the accused were photocopying new notes of Rs 2,000 and Rs 500 at a photo studio in Bhopal using high-quality papers and colour printers. They circulated the fake notes in rural areas, mostly at petrol pumps at midnight. Whenever anyone asked them about the authenticity of the notes, they claimed they were the new notes issued by the Government of India after demonetisation."

"Acting on a tip off, we had caught a gang of four with fake notes worthRs 2 lakh," she added.

Inter-state and international connections

Unlike photocopying, printing fake currency is as hard as crushing iron with your teeth. According to the police, there have been no cases of fake notes being printed in the state. These, according to police findings, enter Madhya Pradesh through inter-state channels.

"High-quality printed notes enter Madhya Pradesh through West Bengal, Bihar and Odisha, where printing of illegal currency notes are rampant. The rackets are mostly connected to international groups," a senior official of the Madhya Pradesh STF said, requesting anonymity.

Printing and photocopying are quite different. It takes too much effort, time and money to print fake notes, but these are much closer in look to the originals than photocopied currency.

"Last year, the Bhopal Crime Branch had busted a case of fake currency notes with links to an inter-state fake currency gang active in West Bengal, Bihar and Odisha," the STF official said. "In some cases, we found links with groups in Bangladesh, Nepal and Bhutan, but not Pakistan, though further investigations are on."

However, the official rejected the claim that demonetisation had anything to do with the spike in the number of counterfeit currency cases in Madhya Pradesh. "The note ban has nothing to do with  counterfeit currency. Both are different issues," he asserted.

Cases of inter-state circulation of fake notes are not exclusive to Madhya Pradesh post demonetisation. Counterfeit currency worth Rs 21.54 crore has been seized countrywide since the note ban was enforced.

On 7 February, in response to a question raised in the Lok Sabha, Minister of State for Home Affairs Hansraj Ahir informed the House that agencies had confiscated counterfeit currency to the tune of Rs 21.54 crore since demonetisation. He had said that information from security and intelligence agencies indicated that Pakistan was involved in manufacturing and smuggling the fake currency into India.

However, there is no documentary evidence of counterfeit notes of Pakistani origin being seized since the Centre demonetised Rs 500 and Rs 1,000 notes.

If caught for the crime, the police book the accused under sections 467 (forgery), 471 (using a forged document as genuine), 489 (B) (using as genuine, forged or counterfeit notes), 489 (C) (possession of forged or counterfeit currency) and others of the Indian Penal Code.

The Additional Director General of the Madhya Pradesh STF, SW Naqvi, refused to comment on the issue of fake currency note rackets in the state.


Updated Date: Sep 17, 2018 18:57 PM

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