The Indian government Friday said gains from fake currency business are going abroad through the hawala route and admitted that the quality of fake currency has gone up with better imitation of security features.
"It is a fact that the proceeds of the fake currency note business are remitted abroad via the hawala route," minister of state for finance Namo Narain Meena informed the
Lok Sabha (Lower House of Indian Parliament). Hawala is illegal exchange of money including via non-banking channels.
Meena, however, said it does not translate in physical movement of genuine currency. In terms of conversion rate of fake into genuine currency, the rate differs at various points
in the supply chain and also in geographic terms.
"The rate for a bulk supplier in Nepal is different from the rate for a bulk supplier here. Similarly, retail rates are different within the country, that is to say cheaper along the border. The rate is also dependent on the quality of the fake note," he said.
Further Meena said the quality of fake notes has improved over the years in terms of imitating the genuine notes. But still banks and experts could differentiate between the two,
he said, adding "while the quality of fake notes has become sophisticated and has imitated several security features of the post-2005 era, it is possible for banks and other experts to distinguish between real and fake notes."
Additional security features are incorporated in the bank notes from time to time to make counterfeiting difficult, he said and admitted that there is no estimate available of fake notes in circulation. However, as per the National Crime Records Bureau (NCRB), fake notes with notional value of over Rs 22 crore have been seized or recovered in 2009.
In reply to another query, he said the Reserve Bank imposes penalty for the forged notes detected in soiled note remittances or in "chest balances of currency chest" of banks.
"During July 2009-February 2010 penalty amounting to Rs 1,08,23,219 was recovered from public sector banks on account of forged notes detected in soiled note remittances or in chest balances," he said.