Faking it with help of Nepal, the truth behind the supply of fake notes in India

A five hundred rupee note was returned back to my friend by a cashier. When she inquired, she was informed that the note was fake. The cashier humbly said “Madam, the note is not genuine; you can be jailed for this. Since you have been a dedicated customer to us, I’m not tearing the note apart. Kindly try to use it elsewhere.”

His reply stunned me but then I thought why do situations like these arise and what should we and what do we actually do in such situations. Well the Section 489-c of the Indian Penal Code states that if any person is aware that he was/is in possession of the counterfeit currency, he may be imprisoned for up to 7 years, or shall be liable to fine or both. Thus, anyone who knowingly wants to pass off a fake currency can be penalized under the Indian laws.

The problem can be divided into two separate heads. Firstly, where does this counterfeit currency coming from? And Secondly, What should be done if you are in possession of such currency?

Origins of the fake currency

Recent police investigations have revealed that ISI is directly controlling the smuggling of fake currency in India. It is alleged that Pakistan is actively involved in such activities and the currency is sent to India via Nepal and Bangladesh.

India shares close diplomatic ties with Nepal. The citizens of both the nations are not required to have visas for travelling to each other’s country. On the other hand, although India and Bangladesh do not have such an arrangement but their geographical closeness between the two often helps people to cross-borders without any legal sanction behind it.

Both these conditions are favourable for our enemy country. The poverty in Nepal and Bangladesh can be conveniently exploited by ISI to ruin the Indian economy. The burden on the Indian authorities has increased manifold recently. There are large numbers of people who traverse to India from Bangladesh and Nepal through a various modes. To keep strict vigilance on all the visitors has proved very difficult in past.


1. According to an Intelligence Bureau Report (2008) fake currency worth more than Rs. 1,70,000 crore is in circulation in India.

2. About 22 people who possessed fake Indian currency were arrested in Nepal in 2010 alone.

3. In January, 2010 Younus Ansari, son of Salim Ansari (Former Forest Minister, Nepal) was arrested with fake notes worth Rs. 25,000.

4. The smugglers have now started using more sofisticated and innovative technologies to counterfiet currency. Moreover, instead of carrying large amounts as earlier (70-90 lacks); they prefer smuggling lesser chunks of money (say 10-15 lacks).


The Week in one of its investigative articles contended that Pakistan is now manufacturing “super fake notes” to India. The notes are allegedly produced in government-run facilities in Pakistan. It is very difficult to distinguish such notes from genuine currency.

Only 95% of Indian currency paper is imported from 11 firms in Europe. Most of the security features are incorporated when the paper is produced. This includes engraving of watermark and magnetic properties to the currency. However, specific features like micro-lettering, placing of Mahatma Gandhi portrait, signature of RBI governor etc are incorporated at the printing stage i.e. in India.

Almost all the South-Asian countries subscribe to these European Firms for the supply of paper for their currencies. The functioning of the foreign firms is also under a suspicion.


Nepal has recently constituted a Central Investigation Bureau to look into the increasing supply of fake currency to India via Nepal which would definitely prove useful in the longer run. But the problem needs to be addressed at various stages by us aswell.

1. The involvement of the European firms must be checked an their tenders must be cancelled in case their conduct is found faulty.

2. Diplomatic pressure should be build on all the three countries i.e. Nepal, Bangladesh and Pakistan.

3. New recruitments should be made in the Border Security Forces. Moreover, the Airport staff and other police officers should be trained and made well-acquainted with the new techniques used by the smugglers.

4. The currency awareness programs in the past have not attained much success in the past. A better option would be to include educational institutions and educate the students in this regard.

(This post deals with why and how the counterfeit currency is reaching in India. The second part of the problem i.e. the attitude of Indians towards fake currency would be dealt in the subsequent post)

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