Friday, 20 Jun, 2025
With counterfeiters now eyeing the Rs 500 note—the highest denomination still widely used—pressure is mounting for upgraded security features in future currency designs.
The fight against fake currency has entered a new phase. The number of counterfeit Rs 500 banknotes discovered in the financial system jumped by over a third in the past year, even as the total volume of fake currency detected declined slightly, according to the Reserve Bank of India’s (RBI) latest annual report.
In the 2024–25 financial year, authorities flagged 117,722 forged Rs 500 notes—a 37.4 per cent increase from the previous year, and the highest count since 2019–20. The sharp rise comes as the Rs 2000 note, once the most frequently counterfeited denomination, all but disappears from circulation.
The withdrawal of the Rs 2000 note, announced by the central bank in May 2023, has been decisive. As of April 30, 2025, more than 98 per cent of the high-value notes had been returned to banks, reducing their total value in circulation from Rs 3.56 lakh crore to just Rs 6,266 crore. Unsurprisingly, fake Rs 2000 detections plunged by nearly 87 per cent to just 3,508.
As counterfeiters shift their attention, the Rs 500 note—now the highest denomination in wide circulation—has become the most attractive target. The trend may accelerate calls for enhanced security features in future note designs.
The overall tally of fake currency fell marginally to 217,396 notes in FY25, continuing a multi-year downtrend. But the breakdown by denomination revealed uneven shifts: counterfeit Rs 100 notes fell by nearly a quarter, while fake Rs 200 notes rose 14 per cent to 32,600.
The RBI’s data paints a picture of adaptation: as one door closes, another opens. The challenge for policymakers will be to stay ahead of criminal innovation.
Fraud cases fall, but money lost tells a different story
The RBI report also underlined a troubling paradox in the banking sector: the number of fraud cases fell, but the amount of money involved surged.
Frauds dropped 34 per cent year-on-year to 23,953 cases in FY25. However, the total value ballooned to Rs 36,014 crore—nearly triple the previous year’s amount. A key driver was the reclassification of 122 older cases worth Rs 18,674 crore, following a Supreme Court ruling in March 2023 that brought them back into the official record.
Private banks accounted for nearly 60 per cent of reported incidents, with 14,233 cases. Yet public sector banks, despite fewer cases, bore the brunt of financial losses—Rs 25,667 crore, or more than 70 per cent of the total.
Digital payment frauds made up the majority of reported cases—13,516 in total—but caused relatively modest losses of Rs 520 crore. Loan-related frauds were far fewer (7,950 cases), but far more damaging, accounting for over Rs 33,000 crore, or more than 90 per cent of the total value involved.
The divide is stark: private banks are grappling with a high volume of smaller, tech-driven scams, while public sector institutions remain vulnerable to large-scale loan defaults and irregularities.
Together, the data points to a two-pronged policy challenge—strengthening digital safeguards in private banks and tightening lending oversight in public ones. As counterfeiters pivot to the Rs 500 note and fraudsters exploit gaps in both digital platforms and traditional lending, the message is clear: vigilance must evolve as rapidly as the risks. For policymakers and financial institutions alike, the twin priorities of upgrading currency security and reinforcing institutional safeguards—especially in public sector banks—will be critical to preserving trust in the system.
