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The Fake Currency Notes Syndrome

Monday, September 24, 2012

Margarine ghee, margarine oil, margarine medicine and above all fake currency notes. The first three affect your health, while the fourth harms the economy. But, in spite of the fact that the Government is well aware of the seriousness of the problem and the reasons behind it, no remedy has been found, leave alone applied. Who is behind the fake currency notes racket?  Investigative journalist Shashi Shekhar delves into the depth of, what can be termed as a major drawback in the system. His report raises many questions…

According to the Reserve Bank of India (RBI), in the last six years, approximately Rs. 76 crores of fake notes were seized. The RBI speaks only about the seized money. However, a report from a Parliamentary Committee states that fake notes worth Rs. 1,69,000 crores are distributed in the market. But in reality, nobody knows the total number of fake notes which are floating around in the market and being passed off as genuine.

The question then arises: what are organisations like the RBI, Central Bureau of Investigation (CBI) and the National Investigation Agency (NIA) doing to reduce this problem? When it comes to the Central Government, doesn’t it have information about the people who are responsible for perpetuating this vicious circle of fake notes in the country?

It is quite interesting to note that whenever fake notes have been caught, accusing fingers are pointed directly at one particular country – Pakistan, and on one particular organisation — the Inter Services Intelligence (ISI). But they are not the only ones responsible in the shocking story of fake notes. There are some others as well about whom both the Government and the Investigative Agencies (IA) are fully aware, but do not disclose publicly.

Meanwhile, according to documents, during 2011-2012, an amount worth Rs. 24.7 crores in fake notes was seized. According to statistics, this amount is five times more than the amount of fake notes which were seized five years ago. The RBI started the work of seizing fake notes in 1996. And according to the RBI, in the last five years, approximately Rs. 76 crores has been seized. The fake notes seized during the period 2010-2011 amounted to Rs. 18.9 crores; in 2009-2010 they amounted to Rs. 16.45 crores, in 2008-2009 they amounted to Rs. 15.5 crores and during the period 2007-2008 they amounted to Rs. 4.54 crores.

When we compare the seized amount of fake notes between 2007-08 and 2011-12, the latter are approximately five times more. In this amount, 500 rupees notes are the maximum. In a reply from the Home Ministry available with the the Delhi based leading publication, Chauthi Duniya, the RBI, the Finance Ministry, the Home Ministry, IA and the NIA have been empowered with the responsibility of tackling the situation. But the big questions remain: has the NIA been able to identify the people and the companies involved in the fake notes racket? And if they have been identified, then at what stage are they at this point of time and has the information which has been unearthed been provided to the public or the media?

As mentioned earlier, whenever fake notes are seized, the names of Pakistan and the ISI always come to the forefront, but this is only partially correct. In the actual story, there are others involved in this conspiracy, namely, the few companies who had a role earlier in the printing of currencies or supply of currency papers for India.

A Parliamentary Committee Chaired by V. Kishore Chandra Singh Deo, gave a report some time ago. If this report is correct, then America, Germany and England might also be involved in the conspiracy. The Parliamentary Committee gave indications of this in its report. The fact is that in 1996-97, the RBI was in need of notes amounting to a total of Rs. 3,35,900 crores. However, they had a total of printed notes of only Rs. 2,16,575 crore at that point of time. Obviously, the RBI was in need of notes to the tune of Rs. 1,20,000 crores. Citing this reason, the RBI and the then Finance Minister decided to have Indian currency notes printed through foreign agencies/companies. Taking this decision into consideration, would it be wrong to presume that the agencies/companies involved might also be involved in the racket of fake currency notes?

It is therefore a valid assumption that the decision taken by the Indian Government in 1997 affected the country adversely. Can the RBI and P. Chidambaram (the present and ‘then’ Finance Minister) take the guarantee of proving that the assumptions and presumptions that have been made are incorrect?
Moreover, there are other important questions that need an answer: Even so many years after Independence, are the mints of the country incapable of printing currency notes in accordance with the needs of the country? If there was a need to print a larger number of notes in 1997 and the mints were incapable of printing the numbers required, why were efforts not made to make these mints capable of printing the required number of notes? Why was the printing of notes done in foreign countries?

The report of the Parliamentary Committee states that the contract for printing Indian currency notes through foreign companies had a proviso that after the completion of printing, the note plates and the ink would be destroyed. Whether the companies abided by the contract rules is still an open question. The RBI is not giving guarantees that the companies fulfilled all the requirements in the contract. The most disturbing element is that the present Government is totally silent on this issue.

The entire fake currency note issue is related to the economic safety of the country. This issue is also about keeping Parliament and the public in the dark. Chauthi Duniya had earlier, with the help of its reports, said that the companies who had been printing Indian currency notes could well be the companies who might also be involved in the printing of fake 500 and 1000 rupee notes. (Refer Box Story). The question is: why is there silence on this dangerous controversy from the Government and the  above mentioned agencies/ companies?

It is quite interesting to note that whenever fake notes have been seized, accusing fingers are pointed directly at one particular country;Pakistan, and on one particular organisation — their Inter Services Intelligence (ISI). But they are not the only ones responsible in the shocking story of fake notes. A Parliamentary Committee Chaired by V. Kishore Chandra Singh Deo, gave a report some time ago. If this report is correct, then America, Germany and England might also be involved in the conspiracy.

Who is De La Rue?
Roberto Gyori is known by the name of “Currency King” all over the world. Roberto is called the “Currency King” because he is the owner of the company named “De La Rue”. 90% of the business of printing the currencies of many countries of the world are in the hands of this company. Chauthi Duniya, in many of its reports earlier has revealed this fact and how this company might be involved in the printing of fake currency notes in India. The De La Rue Company had its biggest contract with the RBI, where they supplied bank note paper with its special watermark to the bank.

There were news reports in January 2011 that the Indian Government had broken its relationship with the company. The Government gave the contract of printing 16,000 tons of currency paper to 4 competitors of the De La Rue Company. The RBI did not even invite the De La Rue Company to take part in this tender. Why was this decision taken by the RBI and the Indian Government? Was Parliament informed about this decision?

The answers to these questions are important. Despite this, the relationship between the De La Rue Company and India did not end. The company has a big office in Gurgaon. Apart from currency papers, the De La Rue Company deals with passports, high security paper, security printing, hologram and cash processing solutions at its Gurgaon office. Significantly, this company also sells fake note detection machines in India. What could be more interesting:  the very company suspected of printing fake currency notes is also providing the fake note detection machines to India. If the Investigative Agencies are stating that the paper of the real notes is similar to that of the fake notes, then why is the Government not taking any action against the company and how is the company still running its office in the country?

Parliamentary Committee Report
A Parliamentary Committee gave a report some time back. This report stated that during  1996-97, the RBI and the Finance Minister of the then Government had taken a decision to get Indian currency notes amounting to a total of Rs. 1 lakh crore printed by foreign companies namely American Bank Note Company (America), Thomas De La Rue (England), Giesecke Devrient Consortium (Germany). 

The questions are: on what basis did the Government place faith in the selected companies and assign them the responsibility of printing Indian currency notes? How can it be ascertained beyond doubt that these companies did not misuse the Indian currency notes and are still continuing to do so?

Can the RBI and P. Chidambaram (the present and ‘then’ Finance Minister) give a guarantee on this count? It is noteworthy (pun unintended) that when the Parliamentary Committee asked the RBI about the security rules for the printing of Indian currency notes abroad, it could not give a satisfactory answer. The RBI has sent a written reply to the Parliamentary Committee stating that the security measures applied for the printing of notes, including the period before the printing and after the completion of the contract, was the responsibility of the printing company.

Apart from this, the making of important plates for the printing of notes was also the responsibility of the company. Not only this, the responsibility of security for the photo print, dyes and numbering box etc. was also of the company. It is quite obvious that a company that has so much information related to the printing of notes can misuse it easily whenever it wishes. It can print lakhs and lakhs of notes on the same number. It can use the plates and dye at a later stage.

Has the RBI or the Indian Government ever tried to investigate this issue? Are Parliament and the public aware about the information available in this case? If the Parliamentary Committee has expressed concern that this decision of the RBI was like putting the economic sovereignty of the country in danger, then it cannot be considered a baseless concern.

The Reserve Bank has a website explaining ways to detect counterfeit notes. Called 'Pehchano Paise Ki Boli, Kyunki Paisa Bolta Hai', the website -- -- gives visual presentation with pointers on currency notes of 10, 20, 50, 100, 500 and 1,000 rupee denominations.

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