What changed
RBI has issued a comprehensive Master Direction replacing all previous circulars and master circulars on counterfeit notes. The new directive consolidates and updates instructions on detection, impounding, reporting, and monitoring of counterfeit notes. It also withdraws the circulars listed in Annex IX.
What it means for you
Banks now have a single reference document for all counterfeit note procedures, reducing ambiguity. The emphasis on machine-based detection and strict reporting to multiple agencies (RBI, NCRB, FIU-IND) increases compliance burden. Failure to impound notes is treated as wilful involvement, attracting penalties.
What you must do
- Update internal policies and training modules to align with the new Master Direction.
- Ensure all branches use machines to examine notes tendered over the counter and in bulk.
- Immediately stamp and impound any counterfeit notes, issue acknowledgement receipts to tenderers.
- Designate a nodal bank officer and establish a Forged Notes Vigilance Cell at head office.
- Submit monthly reports to RBI and half-yearly reports to NCRB and FIU-IND as per new formats.
Who it affects
All scheduled commercial banks, Currency chests, Bank branches handling cash transactions, Compliance and vigilance departments, Cash management and ATM operations teams
What happens if a bank fails to impound a counterfeit note?
RBI considers this as wilful involvement in circulating counterfeit notes and will impose penalties. Banks must never return or destroy counterfeit notes.
Do we need to issue a receipt to the person who gave the counterfeit note?
Yes, an acknowledgement receipt in the prescribed format (Annex II) must be issued after stamping the note. The receipt should be in running serial numbers and authenticated by the cashier and tenderer.
Which previous circulars are withdrawn by this Master Direction?
All circulars listed in Annex IX of the Master Direction, along with all earlier Master Circulars and Directions on counterfeit notes, stand withdrawn from April 1, 2026.