RBI Withdraws Banks' 25% Compensation for Detecting Fake Notes

Mumbai: The Reserve Bank of India on Thursday said it has withdrawn the instructions on compensation to banks at 25 per cent of the notional value of counterfeit notes detected. "The instructions on compensation to banks at 25 per cent of the notional value of counterfeit notes detected and reported and the system of lodging claims for compensation by Forged Note Vigilance Cell of banks stands withdrawn," the RBI said in a communication addressed to all bank chiefs. Also, a penalty at 100 per cent of the notional value of counterfeit notes, in addition to the recovery of loss to the extent of the notional value of such notes, will be imposed when counterfeit notes are detected in soiled note remittance of the bank and if counterfeit notes are detected in currency chest balance of a bank during inspection/audit by the RBI. Among others, the RBI asked banks to authenticate over-the-counter (OTC) banknotes through machines as well as to stamp those fake as "counterfeit note" and impound. "Banknotes tendered over the counter should be examined for authenticity through machines and such of these determined as a counterfeit one, shall be stamped as 'counterfeit note' and impounded." "Each such impounded note shall be recorded under authentication, in a separate register," it said. For banknotes received in bulk at back office or currency chest through bulk tenders, the same procedure should be adopted, it added. Also, when a banknote tendered at the counter of a bank branch or treasury is found to be counterfeit, an acknowledgment receipt must be issued to the tenderer, after stamping the note as counterfeit. Further, the receipt, in running serial numbers, should be authenticated by the cashier and tenderer. "Notice to this effect should be displayed prominently at the offices/branches for information of the public. The receipt is to be issued even in cases where the tenderer is unwilling to countersign it," it said. The RBI said no credit to customer's account is to be given for counterfeit notes, if any, in the tender received over the counter or at the back-office/currency chest. The instructions come into effect immediately.

RBI Withdraws Banks' 25% Compensation for Detecting Fake Notes

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