The man, 30-year-old Gautam Mandal, was arrested in this connection.
Police personnel of Englishbazar police station became suspicious after they found Mandal loitering about in the area yesterday.
The counterfeits with a fake denomination of Rs 1000 were recovered from his possession during frisking, the officer said.
Mandal is a resident of Sukhdevpur area of the town, he said.
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