Fake currency notes of Rs 500 & Rs 2,000 surge threefold in 3 years: FinMin

Finance Ministry data shows a fourfold rise in fake Rs 500 notes since 2018 and Rs 2,000 counterfeits tripled since 2021

Counterfeit Rs 500 notes from the Mahatma Gandhi (new) series have nearly quadrupled between 2018-19 and 2023-24. Meanwhile, the detection of counterfeit Rs 2,000 notes has tripled since 2020-21, data shared by the Ministry of Finance showed.

 

The Ministry of Finance addressed concerns about the rising prevalence of counterfeit currency in a recent Lok Sabha session on Monday. The reply, presented by Minister of State for Finance Pankaj Chaudhary, shed light on the trends in counterfeit notes, particularly of Rs 500 and Rs 2,000 denominations, over recent years.

 

Counterfeit Rs 500 notes

The Rs 500 note has become the backbone of day-to-day transactions, with its circulation witnessing consistent growth over the years.

 

Data shared by the ministry showed that in 2018-19 21,865 million pieces (mpcs) of the fake currency notes were detected. It reached its peak at 91,110 mpcs in 2022-23, before slightly declining to 85,711 mpcs in 2023-24.

This is a sharp increase from 21,865 mpcs detected in 2018-19.

 

Tripling of fake Rs 2,000 notes

The detection of counterfeit Rs 2,000 notes has tripled since 2020-21, data showed.

 

The number of fake Rs 2,000 notes detected dropped significantly from 21,847 in 2018-19 to 8,798 in 2020-21. The following year (financial year 2021-22) 13,604 mpcs were detected before again dropping to 9,806 mpcs in 2022-23.

 

The latest data for 2023-24 shows a significant surge to 26,035, which is nearly three times the detections in 2020-21 and a substantial increase compared to the preceding years. 

 

Rs 2,000 note launch and decline

The Rs 2,000 currency note was launched as a high-value denomination to quickly replenish cash supply after Rs 500 and Rs 1,000 notes were demonetised in 2016. Its initial purpose was to ease liquidity during the cash crunch.

 

In the years immediately following its introduction, the Rs 2,000 note saw widespread circulation. By March 2018, Rs 2,000 notes accounted for 37.3 per cent of the total currency value in circulation, according to the Reserve Bank of India (RBI) data.

 

In 2018-19, the RBI reduced the printing of Rs 2,000 notes, citing low demand and concerns over its misuse for illegal activities. By March 2021, Rs 2,000 notes accounted for only 17 per cent of the total currency value, indicating a gradual phasing out.

 

The RBI announced the withdrawal of Rs 2,000 notes from active circulation in May 2023, although they remain legal tender. Citizens were given time to exchange or deposit these notes at banks, with most being removed from the system. This phased withdrawal aligns with the RBI’s strategy to focus on Rs 500 notes as the primary high-value denomination.