The Reserve Bank of India (RBI) has reported a significant increase in the detection of counterfeit Rs 500 denomination notes within the Indian banking system. According to the RBI's annual report for 2024-25, the number of fake Rs 500 notes detected surged by 37.3% compared to the previous year. This rise has brought the prevalence of counterfeit Rs 500 notes to a six-year high.
In 2024-25, a total of 1.18 lakh counterfeit Rs 500 notes (new design) were detected, with a face value of ₹5.88 crore. This is a notable increase from the 85,711 notes valued at ₹4.28 crore that were detected in 2023-24. These fake notes constitute a major portion of the total counterfeit currency discovered in the banking system. RBI Governor Sanjay Malhotra informed a parliamentary panel that out of over 6 crore currency notes, 1.12 lakh pieces of Rs 500 denomination were found to be fake during 2024-25.
While the detection of fake Rs 500 notes has increased sharply, the overall number of counterfeit currency notes detected in the banking system saw a slight decrease. In 2024-25, a total of 2.17 lakh counterfeit notes were detected, compared to 2.22 lakh in the previous year. This decline is attributed to improved security features in banknotes and greater vigilance in the banking system.
The RBI's annual report also highlighted an increase in the detection of counterfeit Rs 200 notes, with a 13.9% rise in 2024-25. A total of 32,660 fake notes of this denomination were found, valued at ₹65.32 lakh, compared to 28,672 notes worth ₹57.34 lakh in the previous year.
Conversely, there was a significant decline in the number of counterfeit Rs 2,000 notes detected, dropping by 86.5%. This decrease is linked to the gradual withdrawal of the Rs 2,000 denomination from circulation. In 2024-25, only 3,508 counterfeit Rs 2,000 notes were identified, compared to 26,035 in 2023-24.
The detection of counterfeit notes in other denominations, such as Rs 10, Rs 20, Rs 50, and Rs 100, accounted for a combined 91.1% of counterfeit detections in these categories. The detection rates for these denominations were 32.3%, 14%, 21.8%, and 23% respectively.
Of the total counterfeit notes detected, a significant majority (95.3%) were flagged by banks, while the remaining 4.7% were detected by the RBI. This underscores the critical role of banks in identifying and preventing the circulation of fake currency.
Despite the increase in counterfeit Rs 500 notes, the total value and volume of currency in circulation have grown. In 2024-25, the value of currency in circulation increased by 6%, while the volume grew by 5.6%. The Rs 500 notes continue to dominate, comprising 86% of the value and 40.9% of the volume of total banknotes in circulation.
The rise in counterfeit Rs 500 notes raises concerns about the integrity of the currency system and the potential for financial losses to individuals and businesses. The RBI is expected to continue its efforts to enhance security features in banknotes and strengthen detection mechanisms in banks to curb the circulation of fake currency. Additionally, public awareness campaigns can help individuals identify counterfeit notes and take precautions to avoid falling victim to currency scams.
