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The very serious business of funny money-I

Welcome to the real convoluted world of counterfeit currency in India, where the victim is prosecuted, the fence eats the crop, and the criminals walk free. This is the first part of a three-part series

So you thought that just because you got your currency notes from across a bank teller's counter or an ATM, they were guaranteed to be the genuine item?
 
Just one of many episodes - over Rs4 crore worth of fake currency in an assortment of 500 and 1,000 rupee denominations, running into 76,108 currency notes, would take around 80 shoe-boxes to fill. That is about 8-10 large steel trunks of the sort used by banks to move cash around. One could probably understand if it was moving from one hoodlum to another, or a large city, or even in a medium or small town. But as part of an RBI controlled cash chest at an SBI branch in an extremely small town in Uttar Pradesh that does not even have a railway station? Domariganj, close to the Indo-Nepal border, probably doesn't transact in lakhs per day, but hey, that didn't prevent the fine people at SBI from replacing Rs4 crore worth of genuine money with some funny money made elsewhere - same series, everything.
 
This episode a couple of years ago was sought to be hushed up by both RBI and SBI. However, the grapevine is supreme, and there is no smoke without fire - so the buzz is that this currency was destined, via private transporters, to the business of refilling ATM cartridges - which as of now is also privatised, and as per information, is often still not required to provide currency note checking facilities. Till March 2011, and that also only where branches have daily cash transactions exceeding Rs50 lakh, you will continue to get currency notes that may not have been "duly checked for authenticity/genuineness and fitness by machines."
 
(For more, see: http://www.rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=5376).

Were those who were behind this crime punished? We don't know, but if you had found yourself with even one of those currency notes, and then tried to go back to SBI to argue about it, well, hey, they would have filed an FIR with the local police. Against you. That's for sure. How about that for a neat system to make sure that any fake notes in circulation will not be complained about?
 
Welcome to the real convoluted world of counterfeit currency in India, where the victim is prosecuted, the fence eats the crop, and the criminals walk free. Matter of fact, they rename themselves the "cash management industry", are closely allied to the "payment processing industry", and will make sure the system will lock you up if you try to complain about them. (Moneylife had earlier reported about the issue. Read more http://www.suchetadalal.com/?id=c63f9c37-83fa-d18a-4a8425120108&base=sections&f and http://suchetadalal.com/?id=aa6db152-66d8-27d4-49b4f6fd0e2f&base=sections&f&t=Even+RBI+Can%27t+Check+Fakes! )
 
Seafarers worldwide are natural and favourite targets for fake and counterfeit currency, such is the nature of the job. Earning in one currency, getting paid in another, spending in a third and getting change back in a fourth, is par for the course. As a result, they acquire a reasonably sharp sixth sense about the subject, and pick up enough from the grapevine too.
 
For example, in the '70s, ports in Taiwan, the Philippines and the rest of the Far East, including and especially Singapore before it went sterile and sanitised, were areas of high caution. The regular SCI-operated passenger ship between Singapore, Malaysia and (erstwhile) Madras, called the MV Chidambaram, was especially famous as a regular carrier of fake currency, with the way-port of Nagapattinam a known transit point. When the Suez Canal re-opened, it was awash with fake German currency, many were the unwary who were saddled with close to worthless East German marks at market rates matching the West German ones. And Aden, for some reason, was one location where bundles of well-worn and used fake Indian currency could be obtained in the local souks - much of this currency was 'used', because it had been used as legal tender in the Arab countries and some of the African countries, in the past. Till the '70s.
 
Likewise, it was always rumoured that the areas around Kolhapur and Belgaum, especially Khanapur, were centres of excellence as far as printing anything counterfeit was concerned. This probably started off as a mutually damaging effort on the part of the Portuguese in Goa versus the British in India before and during World War II and everybody else after that, till the more famous stamp paper scandal of the recent past.
 
Your correspondent was on a cargo ship trading worldwide, which called at a small port on the West Coast of the US, mid-70s. We went ashore to the local market and bars one evening with US currency that was paid to us in Singapore, some of which was found to be counterfeit, and then tracked back to us. As our ship was still in port, we ended up being questioned very closely indeed - first by the local police, and subsequently Treasury agents from the US Secret Service.
 
That was the first time in my life when I learnt how countries like the US approach the issue of the sanctity of their currency. It is at a level which is on par if not higher than the safety of the life of their President as well as the defence of their country. However, the complete investigation as far as we or our ship was concerned was not to blame us or find us guilty, but to co-opt our assistance in trying to trace the source for this currency. The investigators, and they were really tough and mean looking big guys, took immense pain and effort to let all of us know that we or our ship were not going to be put to any trouble - but at the same time, they certainly wanted to know as much as they could, so would we please co-operate?
 
And pass the beer, hey, we were all good guys on the same side.
 
Here is the link (http://www.rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=5828) to the relevant RBI circular instructing banks and other entities in India on what to do in case their customers or they detect fake or counterfeit currency in the course of their daily work. Please do not miss the wording of the FIR, which immediately places the customer at a disadvantaged position - even if he or she had just been given the same counterfeit currency by the same bank!
 
Moneylife awaits responses from RBI on the subject.

(The second part of this series will appear tomorrow).

User

COMMENTS

vikas murkute

6 years ago

hi iam vikas mony foundation in association with reliance mutual fund,organised the big ideas and smart and monay.thanks?

P K Biswas

6 years ago

Dear Mr. Malik
In case you intend to follow up the matter and need information for that purpose, I shall provide you the same to the best of my knowledge. I am sure you do realise that printing of banknotes is a huge business and there are too many interested parties. So you need to draft your article carefully.
Best wishes.
P. K. Biswas

REPLY

V malik

In Reply to P K Biswas 6 years ago

Dear PK Biswas, most certainly I would be grateful for information, and thank you for the same. You could post it c/o Moneylife, or eMail me c/o Moneylife or directly at veereshmalik at gmail dot com.

Thank you,

Veeresh

JSBatra

6 years ago

Veeresh Sir, I've been at the receiving end. At BOB, CP Branch, where I had gone to deposit some money in my Medical College Alumni A\C. The Cashier there told me......you have two choices.
(A) I burn this Rs 500 note in front of you and you hand-over another note to me OR
(B) I call the Police and lodge an FIR naming you as a culprit.
Guess what choice I took?

REPLY

V Malik

In Reply to JSBatra 6 years ago

Well, hopefully now you know better, and will be more prepared to take a correct stand next time. Thank you for writing in.

varun

6 years ago

Great article. Very informative and true to the scenario.

One question: Do the banks have, or not, ANY mechanism to know whether the currency notes have come out of their ATM machine?

2 Scenarios:

1. If I get fake currency notes out of a bank ATM, how can I prove these are from a particular ATM?

2. If I, suppose, take out 5K and the ATM gives me 4K (or God forbid, even less) then how can I prove the deficit to a bank executive?

In short, do they have a serial-number wise account of the notes deposited from the chest to the ATM? Or can I rely on their EOD accounting cycle? Or is it just their word against mine?

REPLY

V Malik

In Reply to varun 6 years ago

Thank you Varun, for your comments.

a) The currency notes that come out a bank's ATM have in India typically been stuffed into the cartridges probably by a casual employee of an employee of a sub-vendor of a vendor of a contractor. The technology to ensure that counterfeit notes do not reach customers from an ATM exist at point of supplying the currency, at the point of stuffing the cartridge, at the point of installing the cartridge into the ATM and at the point of dispensing the currency from the ATM. That counterfeit currency reaches customers despite all these checks and balances can only spell one thing.

b) For the counterfeit currency from ATM scenario, an answer is being provided in the next part.

c) For short supply of currency, please complain directly to RBI on their website - or write to MoneyLife with full details. Complaining to the bank is like going back to the thief!!

pradyot

6 years ago

Very nice article --- sharp delivery, depth of substance . It seems today in this country, we all need the street smartness of a seaman -- to walk the mean streets "neither afraid, nor corruptible".( GK Chesterton)

REPLY

V Malik

In Reply to pradyot 6 years ago

Believe me, I agree with you, Pradyot. Researching on this subject itself teaches one so much, and needs a lot of guts, too.

Sudhir Jatar

6 years ago

Very revealing. I am not surprised if our Queen is not behind this lax manner of treating fake currency. In any case, our Hon'ble FM used to defend known smugglers before he adorned the high offices of HM and FM.
Looking forward to the other two articles.

REPLY

V Malik

In Reply to Sudhir Jatar 6 years ago

Thank you, Sudhir, for your comments. I just tell it like I see it!! But yes, sure, the counterfeit currency "business" is certainly well organised.

j

6 years ago

FAKE CURRENCY IN CIRCULATION / AT OUR DISPOSAL IS NOT OUR CONCERN..BUT THAT OF AUTHORITIES ONLY...that is how IT IS IN ALL SENSIBLE COUNTRIES OF THE WORLD!

THEY MUST KNOW WHAT TO DO & NOT ABOUT IT! AND NOT MAKE STUPID & IDIOTIC LAWS LIKE IF THERE IS AN ACCIDENT WHERE SOMEBODY HITS YOU, YOU ARE THE CULPRIT BECOZ U OWNED THE VEHICLE! MANY INDIAN LAWS ARE LIKE A DONKEY GETTING FEVER!

CREATION, GENERATION & CIRCULATION OF BLACK MONEY ALONG WITH TRERROR MONEY, IS A CREATION OF INDIFFERENT POLITICIANS AND GOVT. ITSELF!

PUBLIC IS NOT TO BE RESPONSIBLE FOR ALL OF IT!

REPLY

V Malik

In Reply to j 6 years ago

Thank you, J, for your comments - read you LOUD and clear. Public is the sovereign, and is certainly going to be the mirror, especially for laws which were designed to keep natives down.

Niranjan Bangera

6 years ago

Hi Mr.Malik, Being a seafarer (ex) myself, this brought back old memories. I have been reading your articles occasionally.

Keep up the good work

Regards,

Niranjan

REPLY

V Malik

In Reply to Niranjan Bangera 6 years ago

Thank you Niranjan, for your kind words, and yes - I too recall how as seafarers "funny money" was almost a regular part of existence onboard. Please stand bye for the next two segments here . . .

P K Biswas

6 years ago

As former ED of RBI and still being interested in ensuring genuine banknotes are in circulation I appreciate the article and wish the article is circulated widely. The article, however, touches only the tip of the iceberg and the malaise (or greed) is deep rooted and will aggravate further with the decision to give INR a symbol of its own.

REPLY

V Malik

In Reply to P K Biswas 6 years ago

Thank you for your kind words, Mr. PK Biswas, and I do hope that you also appreciate the courage it takes for the editors of MoneyLife to publish this. Yes, I am aware it just touches the tip of the iceberg, and am working on placing more here. All help appreciated. There are others who are placing themselves at risk, I am just the writer, so grateful to all the silent people too.

Prakash

6 years ago

Excellent article. You have brought a very valid point to the people. Let's see what RBI has to say.

REPLY

V Malik

In Reply to Prakash 6 years ago

Thank you for your comment, Prakash. We shall need more people to stand up and ask questions of RBI.

The deeper risk is when RBI and others in the fiscal system in India take on vendors and suppliers whose beneficiary details are unknown.

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