All banks in the country are mandated to report such instances to the Financial Intelligence Unit (FIU) under anti-money laundering law provisions.
"The number of counterfeit currency reports (CCRs) increased from a mere 8,580 in 2007-08 to 35,730 in 2008-09 and rose to 3,53,837 in 2014-15," said the report.
However, the amount of fake currency detected has not been specified.
As per the data complied since 2007-08, when the government first mandated the FIU to receive such reports under the Prevention of Money Laundering Act (PMLA) from banks, the year 2009-10 saw reportage of 1,27,781 CCR, in 2010-11 it was 2,51,448, in 2011-12 it was 3,27,382, in 2012-13 they were 3,62,371 and in 2013-14 a total of 3,01,804 such instances were reported.
The data for 2010-11 to 2014-15 shows that the major chunk of these reports, at over 90 per cent, were filed by private Indian banks and a majority of them pertain to usage of fake Indian currency notes (FICN) and not any other valuable security as defined under the CCR terminology.
"The private Indian banks contribute majority of CCRs. The compliance levels of the public sector banks continued to be low despite the matter having been taken up with the RBI," the report said.
It added that during the "review" of public sector banks on this issue, the best practices of private Indian banks in detection and reporting of counterfeit currency notes were highlighted.
A senior Finance Ministry official put the figures in perspective: "CCRs are meant to check the menace and extent of FICN entering the banking system which forms a very important part of the functioning of the economy.
"While the figures of the eight years, since the regime of reportage of such incidents first began, have shown an increasing trend, it is good that the banks are increasingly able to detect them and report to the FIU," the official said.
The FIU under the Union finance ministry, acts as the national agency to provide financial intelligence to law enforcement agencies for safeguarding the economy from abuses of money laundering, terrorist financing and other offences, further disseminates this data to investigative agencies to ascertain the source of the FICN and undertake legal action under criminal laws aimed to check money laundering and black money.
The report, however, did not talk about the results after the CCRs were handed over to probe agencies like the National Investigation Agency (NIA), the Directorate of Revenue Intelligence and others.
The report said the FIU, during 2014-15 also received a total of 58,646 suspicious transaction reports (STRs) from all types of banks, financial institutions like insurance companies, intermediaries like stock brokers and additional non-financial businesses and professions like casinos and private locker operators.
The STRs in the latest data compiled year of 2014-15 were the second highest after 61,953 such reports were received by the FIU in 2013-14.
A suspicious transaction, under PMLA, is defined as any transaction that either indicates that it has been made in circumstances of unusual or unjustified complexity or appears to have no economic rationale or bonafide purpose.
The definition is also applicable to those transactions that give rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism.
As per data, the maximum STRs are reported to the FIU by banks as compared to any other financial intermediary mandated to do so in the country.
Acting on these STRs, the report said, "the CBDT (Income Tax Department) detected unaccounted income of Rs 4,471.65 crore while it seized assets worth Rs 65 crore, the Customs and Service Tax department detected tax evasion to the tune of Rs 21.59 crore and the Enforcement Directorate detected and seized proceeds of crime to the tune of Rs 25 crore during 2014-15."
The agency also received over 3.4 lakh cross-border wire transfer reports (CBWTR) during the said time period.
A CBWTR pertains to any money transfer of Rs 5 lakh and above or its equivalent in foreign currency where either the origin or destination of fund is India.
The central financial intelligence agency first started getting these reports from February, 2014.
The FIU, the report said, possesses information of about 2.5 crore unique persons with average relationship of nearly 8.5 per person and thirteen transactions for each account.