Banks directed to strengthen counterfeit note screening
Key Highlights
- RBI orders border branches to install note authentication machines.
- All banknotes must be machine-verified for authenticity.
- Counterfeit notes must be impounded and reported.
- Banks cannot return or destroy fake currency notes.
- Cash-handling staff must complete training by October 31, 2026.
- RBI asks banks to identify counterfeit currency hotspots.
- New measures aim to strengthen border-area financial security.
The Reserve Bank of India (RBI) has issued fresh directions to banks to strengthen their systems for detecting counterfeit currency, particularly in districts located along India’s international borders. The central bank has instructed all banks operating in these regions to install note authentication and sorting machines to improve the identification of Fake Indian Currency Notes (FICNs).
The move comes after RBI’s internal review found that several banks were not adequately detecting, impounding, and reporting counterfeit notes despite comprehensive guidelines issued earlier in April 2026. The latest directive seeks to tighten compliance and improve the overall security of India’s currency circulation.
According to the RBI, every banknote received at designated branches must now be verified using authentication or sorting machines before being recirculated. Any counterfeit note identified during the verification process must be immediately impounded. Banks have also been instructed not to return fake notes to customers or destroy them under any circumstances.
The central bank has further directed that all detected Fake Indian Currency Notes be reported strictly in accordance with existing RBI reporting procedures. The objective is to improve monitoring of counterfeit currency circulation and enable timely enforcement action wherever required.
As part of the new measures, RBI has asked banks to strengthen employee training programmes. Every staff member involved in cash handling must receive training on identifying genuine currency security features and detecting counterfeit notes. Banks have been given time until October 31, 2026, to complete the training of all relevant employees.
In addition, RBI has instructed banks’ Forged Note Vigilance (FNV) Cells to play a more proactive role by analysing counterfeit currency data, identifying high-risk locations, monitoring emerging trends, and focusing awareness programmes in vulnerable areas.
The regulator believes these steps will significantly improve banks’ preparedness against counterfeit currency threats, particularly in border districts where the risk of fake note circulation is considered higher due to cross-border activities.
The strengthened framework is expected to enhance public confidence in the banking system, improve currency verification standards, and support law enforcement agencies in combating counterfeit currency networks across the country.
