RBI for change in laws to deal with fake currency menace

The Reserve Bank of India (RBI) today said it was in talks with the government to amend the relevant laws to ensure that persons generating fake currency are punished and not those who possess such notes innocently.

“We are in negotiations with the government of India on how this law can be reviewed and changed, so the responsibility for the fake currency is actually on the people who are responsible for generating it,” RBI Governor D Subbarao told reporters after the board meeting here. “But at the moment, regrettably, the holder of fake currency is responsible for that and if a branch manager says that he (the person with the notes) is accountable for it, then he is right,” Subbarao said.

However, he said RBI has asked branch managers to be more sympathetic to people who come with fake currencies and go into the circumstances under which that person has come in possession of the currency notes. “And we could also simplify the process for filing of the FIR report,” he said.

RBI is responsible for fake currency that comes into the banking system, he said, adding, it is not responsible for fake currency outside the banking system.

“We have said banks must check all currency for its cleanliness and for its genuineness before it is fed into the ATMs,” he said. Asked whether there would be open market operation in next month to infuse liquidity, RBI Deputy Governor H R Khan said “between now and then we will assess. If needed we will do.”

RBI has also said it was working with banks to reduce the time gap for issuance of smart card to no-frills account holders.

“Today for getting a smart card after opening a no-frills account takes an average of three months. We are working with the banks and vendors on how to reduce the gap,” RBI Deputy Governor K C Chakrabarty said. Asked about the low usage of no-frills account, Chakrabarty said RBI is monitoring and it is trying to improve the system.