Awareness Fridays: [Update] Guidelines on Detection and Impounding of Counterfeit Notes at Indian Banks

On the subject of detection and impounding of counterfeit notes by banks operating in India, the Reserve Bank of India notes that,

Complaints are being received from the public that while impounding a counterfeit note, the tenderer is not informed the reasons for deeming a note as counterfeit. It is therefore advised that the format of the receipt provided in Annex I of the Master Circular [on Detection and Impounding of Counterfeit Currency] has been modified with immediate effect to indicate the parameters on which a note is deemed as counterfeit.

While I do not agree with all of the measures adopted by the Reserve Bank of India (the recent liquidity infusions, for example), I do agree that we have the best banking and financial regulator in the world. What do you think?

Awareness Fridays is my initiative to spread awareness on topics relevant to personal finance — every Friday. I urge you to take some time off and absorb this information — it’s pretty useful. And, as always, do spread the word if you find this useful.

3 thoughts on “Awareness Fridays: [Update] Guidelines on Detection and Impounding of Counterfeit Notes at Indian Banks

  1. The basic difference between Note Sorting Machine & Desk Top Fake Note Detector/Sorter seems to have not been understood by the majority of Indian Banks as most of the banks presume NSM as the panacea of all remedies against problem of infiltration of Fake Notes in banking channel and have been repeating the very same mistakes by issuing tenders for procurement of NSM for intricate operation of detection of fake notes at cash desks while receiving deposits on counters from the public at large.

    Note Sorting machines basically have been designed for currency sorting processes on the basis of set criterion like designs, quality, orientations, faces, series, fitness etc but
    have not been designed aptly & exhaustively for accurate fake note detection and hence NSM can not be used as a perfect substitute of Desk Top Fake Note Detector/Sorters which are exclusively designed for the specialized process of detection of Fake Notes offering other ancillary functions useful at cash desks or at ATM centers.

    With deployment of accurate Desk Top Fake Note detector the huge investment can be recovered back by avoiding the losses on account of erroneous acceptance of fake notes at cash desks, as also heavy expenditures on consequential legal hassles and lose of Goodwill due to non compliance of strict provisions of law regards to handling of fake notes, though handled unintentionally.

    Most of the recent cases of remittance of fake notes to RBI by many famous Banks have been emerged as a result of deploying wrong equipment like NSM on which highest reliance has been placed. We feel majority of cases seems to be unintentional of human attitude problems while submitting fake notes to RBI’s treasuries.

    The Speed of NSM kills the accuracy of fake note detection as it leaves behind large number of security criterions being unchecked and specifically due to incompatibility of NSM adapting digital technology which ensures the perfection. NSM can not check/scan notes pixel to pixel leading consequential inaccurate & imperfect detection of fake notes except for detecting poorly fabricated notes and thus runs with great risks of passing fake notes as genuine or rejecting genuine notes as fake or doubtful. NSM just throws out large number of doubtful notes with comparatively large number of false alarms and carries very high possibility of passing super fake notes as genuine resulting into issuance of such notes at cash counters or at ATM centers.

    While as the process of 100% accurate detection of fake notes mixed up with genuine notes it self is a different operation requiring a equilibrated combination of Data based and Image based technology where large numbers of check points are to be scanned for a perfect adjudication of fake notes.

    Just image based scanning in NSM bound to pass fake notes which also could be influenced by factors like crispiness, identical images, colors, sizes, ink, water mark, paper, spoilages folds, mutilated, physically damaged, soiled, corner fold, tear, tear, holes, missing corner, denomination, orientation, formats, adhesive taps, limpness, stains etc and those instate of getting detected fake notes would be sorted out under different criterions for which the sorter is set.

    We feel with a view to facilitating the detection of Counterfeit notes, all bank branches/treasuries, at their cash Desks, specifically branches those have been dealing with members of public for acceptance and issuance of notes, should be equipped with Automatic Fake Currency Note detectors commonly known as Desk Top Fake Notes Detector/Sorter or Automatic Currency Validity Verification and Processing Systems (ACVVPSs), instead of Note Sorting Machine.

    The kind of machines Indian Banks at cash counters needed for the fake notes detection purpose are the machine which can verify not only the images, emblems, portraits, texts, water marks, magnetic and other machine readable features of notes but also checks the physical and chemical properties of security paper, varied types of inks, resins, security threads and other materials used in production of notes, constituting large number of check points out of the interrelated combinations & permutations of varied security features in the notes, by automatic one by one pick ups of single note at a time out of the stacked packet of 100 notes of single or mixed denominations, and processes a note in 0.6 seconds and 100 notes in 1 minute. The machine meant for detection of fake notes as prime function invariably should be capable of not allowing any fake note to pass as genuine. It is possible only with the detectors specially developed considering the large number of intricacies concerning to Indian notes.

  2. Friction type intermittent roller operated, fins driven Note Counting Machines ( NCMs ) extended and converted as fake notes detectors by fixing UV/IR/Magmatic and ordinary light sensors are technically baseless and most inaccurate devices for discriminating highly sophisticated super fake notes hidden with genuine notes, as such machines depend on over all surface checking of notes which is most incompatible criterion for accurate detection and discrimination of fake notes that have been incorporated with identical overall features of genuine notes. These kinds of converted FNDs can not pip into the thinnest marginal differences of security features in both categories of notes, although are useful for discriminating poorly fabricated notes which otherwise can be easily detected at a glance or touch feel verifications.
    Detection of Super quality fake notes printed and pumped into any country with supports of other countries having strong sources of procurements of raw materials identical to original specifications & possessing full fledged infrastructures of Bank notes printing, is technically impossible with the incompatibly high scanning speed of 20 notes in a second, I e 0.05 seconds per note by note counting machines or sorters. Especially impossible in case of intricate Indian notes with vide verities of designs, quality, security features, un- uniform nature, spoilages on the notes, mishandlings etc for validity verification & detection of Fake Indian Notes.
    Hence the Desk Top Fake Notes Detectors (DTFNDs) / Mini Currency Validity Verification & Processing Systems (MCVVPSs) have been only the 100% accurate solution for accurate discrimination of super fake notes and genuine note. These highly sensitive and 100% accurate devises in no case be compared with the built up High speed note counting machines or high speed sorters which are meant altogether for different operations of counting and sorting notes on basis of fixed parameters.

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