India's banking system witnessed a notable increase in the detection of counterfeit currency notes, driven primarily by a significant rise in fake Rs 500 notes, according to the latest annual report from the Reserve Bank of India (RBI).
Fake Rs 500 Notes Lead Counterfeit Surge
The report for the financial year 2025-26 highlights a 20.5% jump in the detection of counterfeit Rs 500 notes. A total of 1,41,907 fake Rs 500 notes were identified, up from 1,17,722 pieces in the preceding year. This denomination continues to be the most frequently detected counterfeit across the banking sector, accounting for the largest share of fake currency.
Overall, the total number of counterfeit notes detected across all denominations increased by 5.7%, reaching 2,29,746 pieces in 2025-26, compared to 2,17,396 pieces in 2024-25.
Mixed Trends Across Denominations
While Rs 500 notes saw a substantial increase, counterfeit Rs 20 notes recorded one of the steepest percentage rises, climbing 47.4% to 373 pieces from 253 a year earlier. Conversely, detections of fake notes in several other denominations declined:
- Counterfeit Rs 200 notes fell to 30,591 pieces from 32,660.
- Fake Rs 100 notes dropped to 45,621 from 51,069.
- Detection of counterfeit Rs 50 notes also decreased to 10,274 pieces from 12,015.
Significantly, fake Rs 2,000 notes continued their sharp decline, with detections falling to 824 pieces in 2025-26 from 3,508 in the previous year, following the denomination's phased withdrawal from circulation.
Post-Demonetisation Challenges Persist
These trends emerge nearly a decade after India's 2016 demonetisation exercise, which aimed to curb black money and the circulation of counterfeit currency by withdrawing old Rs 500 and Rs 1,000 notes. Following this, the RBI introduced redesigned Rs 500 notes and new Rs 2,000 notes with enhanced security features, intended to make counterfeiting more difficult.
However, the latest RBI data suggests that counterfeiters continue to target high-circulation denominations, particularly the newer Rs 500 notes, which became the backbone of cash transactions post-demonetisation and the subsequent removal of Rs 2,000 notes.
Detection by Banking Institutions
The RBI report also noted that 97.6% of all counterfeit notes, totaling 2,24,334 pieces, were detected by other banks, while the central bank itself identified 5,412 pieces, accounting for 2.4% of the total. These figures do not include counterfeit notes seized directly by law enforcement agencies.