Banks may not have to file FIRs on detecting fake currency

K Ramkumar :BL:20 june 2012

FinMin wants sorting machines at branches with Rs 25 lakh and above cash receipts

 

The filing of first information report by banks when fake currency notes are detected may be waived, according to a Finance Ministry report. This is aimed at improving reporting of such cases.

Reporting of fake notes should be limited to making the information available to the Reserve Bank of India/Financial Intelligence Unit – India, said the report.

Banks’ branches are generally hesitant to report fake notes to RBI/FIU-IND and in lodging first information report (FIR) with the police. This is primarily because of the fear of police harassment, said the report on reforms in currency chest operations and management.

The report suggests that employees of banks need to be assured that mere reporting of fake currency notes would not land them in trouble and they should be encouraged to promptly report such instances without any sense of fear.

CURRENT DISPENSATION

As the situation obtains now, commercial banks are required to impound all counterfeit notes detected by them and send them to the police for lodging an FIR.

The Criminal Procedure Code requires every person, aware of the commission, or intention, of any other person to commit certain offences, including those relating to counterfeiting of currency, to immediately give information about such commission or intention to the nearest magistrate or police officer.

As per RBI data 4,35,607 fake notes were detected in 2010-11 against 4,01,476 in the previous year. Almost 90 per cent of the counterfeit notes identified were detected at bank branches, with the balance being detected at the RBI.

RECOMMENDATION

The report has recommended that the central bank frame a policy for mandatorily providing note sorting machines (NSMs) at all bank branches with average cash receipt of Rs 25 lakh and above so that the detection of forged notes can be made at the point of entry at each counter.

Further, the RBI should incentivise banks to use of NSMs and other fake note detecting devices.