They said one of the gang members, J Ajmal Khan was arrested during routine patrol after he was found carrying fake Rs 2,000 notes.
On being questioned, he said that the gang were into the business of distributing fake currency, being printed here by his father and they had links to a group in Afghanistan.
Based on this information, Khan's house was raided and the fake currency recovered from there, police said.
Police said they were investigating Khan's claim that the gang had links with a group in Afghanistan.
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