The Reserve Bank of India has issued a consolidated Master Direction setting updated requirements for banks on the detection, impounding, reporting and monitoring of counterfeit or forged banknotes. It pulls existing instructions into a single document and withdraws the listed earlier circulars and master circulars or directions from the date of issuance. Banks must examine banknotes tendered over the counter and received in bulk at the back office or Currency Chest (CC) using machines, provide no credit for notes detected as counterfeit, and neither return nor destroy such notes. Counterfeit notes must be stamped “COUNTERFEIT BANKNOTE”, recorded in a separate register, and acknowledged to the tenderer using the prescribed receipt even if the tenderer refuses to countersign. Reporting to police is transaction-based: detections of up to four (4) pieces are to be included in a month-end consolidated report sent via a district-designated Nodal Bank Officer, while detections of five (5) or more pieces must be forwarded immediately with a request to file an FIR. Cash handling controls must prevent recirculation of INR 100 and above without machine authentication, and banks must implement safeguards before loading ATMs, with counterfeit dispensation treated as an attempt to circulate counterfeit notes, including for White Label ATM Operators. Each bank must establish a head office Forged Note Vigilance (FNV) Cell with specified monitoring, reporting and checking functions, ensure appropriate detection devices and sorting machines (including BIS-certified equipment where required), and maintain daily records of machine-processed notes and counterfeits. Ongoing reporting requirements include monthly returns from the FNV Cell to the relevant Reserve Bank of India Issue Office by the 7th of the following month, including “Nil” reports where applicable, and reporting of counterfeit-related cash transactions to Financial Intelligence Unit-India (FIU-IND) by the 15th of the succeeding month via FINnet, alongside uploads to the National Crime Records Bureau (NCRB) portal. The FNV Cell must submit half-yearly status reports within a fortnight of the end of March and September and update RBI Issue Offices with its particulars by 15 April each year; counterfeit notes returned by police or courts must be preserved and verified on a half-yearly basis and retained for three years before being sent to RBI, subject to litigation-related retention rules.
Reserve Bank of India 2026-04-01
Reserve Bank of India issues updated master direction for banks on counterfeit note detection, impounding and reporting
The Reserve Bank of India has issued a consolidated Master Direction updating requirements for banks on detecting, impounding, reporting and monitoring counterfeit banknotes, withdrawing earlier instructions. Banks must machine-authenticate notes of INR 100 and above, impound and report counterfeit notes under a transaction-based regime, implement controls for ATMs including White Label ATM Operators, and establish a head office Forged Note Vigilance Cell with specified monitoring, reporting and record-keeping obligations to the RBI and other authorities.