TITLE: India's Reserve Bank Issues Directive on Fake Currency Detection and Reporting by Banks
BODY:
On July 31, 2026, the Reserve Bank of India (RBI) issued a notification requiring all banks to strengthen their capacity to detect, impound, and report fake Indian currency notes (FICNs). The directive follows the RBI's Master Direction on Counterfeit Notes – Detection, Reporting and Monitoring, which came into effect on April 1, 2026, and prescribes comprehensive instructions to banks on handling counterfeit currency.
The RBI's analysis revealed that some banks had not adequately implemented the existing counterfeit detection framework. In response, the central bank mandated specific measures to enhance bank preparedness. Banks must conduct focused training and awareness programmes for all cash-handling staff on genuine banknote security features, with all staff receiving training by October 31, 2026. Staff in branches located in border areas must complete training by September 15, 2026, on a priority basis. Banks must also ensure that branches in districts with international borders are equipped with note authentication and sorting machines to facilitate detection of counterfeit notes. The RBI's Forged Note Vigilance (FNV) Cells must analyse FICN data to identify hotspots, monitor trends, and direct capacity-building efforts accordingly.
Banks must submit an action taken report confirming compliance with training requirements by November 7, 2026, and September 22, 2026, for border area staff respectively. A detailed plan of action with progress updates must be submitted by September 15, 2026, to the Department of Currency Management at dcmfnvd@rbi.org.in. Banks face penalties for breaching the Master Direction guidelines, including detection of counterfeit notes in currency remittances, non-impounding of counterfeit notes, and failures in ATM dispensations or over-the-counter payments.