India's banking system registered a significant increase in the detection of counterfeit currency notes during the financial year 2025-26, primarily driven by a sharp 20.5% surge in fake ₹500 notes. The Reserve Bank of India's (RBI) latest annual report revealed that the total number of fake notes found across all denominations rose by 5.7% overall.
Alarming Rise in Fake ₹500 Notes
Counterfeit ₹500 notes remained the most frequently identified denomination, with detections climbing to 1,41,907 pieces in 2025-26, a substantial jump from 1,17,722 pieces recorded in the previous year. This denomination alone accounted for the majority of all counterfeit currency detected within the banking network.
While the ₹500 notes saw the largest volume increase, counterfeit ₹20 notes experienced one of the steepest percentage rises, surging by 47.4% to 373 pieces from 253 pieces a year earlier.
Varying Trends Across Denominations
Conversely, the detection of fake notes in several other denominations showed a decline:
- Counterfeit ₹200 notes fell to 30,591 pieces from 32,660.
- Fake ₹100 notes dropped to 45,621 from 51,069.
- Detection of counterfeit ₹50 notes also decreased to 10,274 pieces from 12,015.
The report also highlighted a sharp decrease in fake ₹2,000 notes, with detections falling to 824 pieces from 3,508 in the previous financial year. This decline is largely attributed to the phased withdrawal of the ₹2,000 denomination from circulation.
Post-Demonetisation Challenges
These latest figures emerge nearly a decade after India's 2016 demonetisation exercise, which saw the withdrawal of old ₹500 and ₹1,000 notes. A key objective of this move was to curb the circulation of black money and counterfeit currency. Following demonetisation, the RBI introduced redesigned ₹500 notes and new ₹2,000 notes, along with upgraded ₹100 notes featuring enhanced security features designed to make counterfeiting more difficult.
However, the RBI data suggests that counterfeiters continue to successfully target high-circulation denominations. The newer ₹500 notes, which became central to cash transactions after demonetisation and the subsequent removal of ₹2,000 notes, appear to be particularly vulnerable.
Detection Sources and Other Findings
The report specified that the vast majority of counterfeit notes, 97.6% (amounting to 2,24,334 pieces), were detected by various banks across the country. The central bank itself detected the remaining 5,412 pieces, accounting for 2.4% of the total. These figures do not include counterfeit notes seized directly by law enforcement agencies.
Additionally, the RBI's annual report noted a significant decline in the disposal of soiled banknotes. A total of 1.72 lakh pieces of soiled notes were disposed of in 2025-26, a drop of approximately 28.6% compared to the 2.38 lakh pieces disposed of in the previous year. ₹500 notes continued to be the most disposed-of denomination, though their volume also decreased.