Demonetisation was aimed to curtail black money and put an end to the circulation of fake currency notes. However, new currency notes have failed to counter the menace of duplication. According to the current figures stated by RBI (Reserve Bank of India), there was a sharp rise of fake notes in the year 2017-18. There was a drastic rise in the number of fake 500 Rs notes from just 199 pieces in the previous year to 9892 pieces in 2017-18, whereas fake 2000 Rs notes witnessed a rise from 638 pieces to 17,929 pieces from the previous year.
High level of counterfeiting was also observed in both Rs 100 and Rs 50 notes. Counterfeit notes of Rs 50 jumped 153.3% to 23,447 in 2017-18 while Rs 100 note witnessed a rise of 35 % and reached to 2,39,182. During 2017-18, 522,783 pieces of fake notes were detected, of which 63.9 % were detected by banks apart from the RBI.
The RBI said in its annual report that the counterfeit notes detected in banned currencies of Rs 500 and Rs 1000 decreased by 59.7 % and 59.6 %, as the same comprised only the residual part of SBN deposits. The number of banknotes in circulation increased 37.7 % over the year to Rs 18,03,700 crore at the end of March 2018. Banknotes in value increased by 2.1%. In terms of share the Rs 500 note and 2000 banknotes, which together summed up to 72.2 % of the total value of banknotes in circulation by the end of March 2017 had increased to 80.2 % by the end of March 2018.
The RBI report also stated that the newly introduced RS 200 banknotes in the entire currency management during 2017-18 contributed to the process of remonetisation and processing along with reconciliation of the specified banknotes (SBNs).
However, the entire Fake Indian Currency Notes (FICNs) detected was higher at 36.1 % compared to 4.3 % during the last year. This was due to the processing of large number of SBNs withdrawn from circulation. During the year 2017-18 27.7 billion pieces of banknotes were disposed due to faster destruction of Rs 500 and 1000 notes. RBI is also consulting the government to increase the life and durability of the Indian banknotes. Many countries have resorted to varnishing of banknotes which increases the lifespan of paper-based currency. International experience also suggest that it reduces the printing costs and also reduces the chances of replacement. It has been proposed to introduce varnished banknotes on trial basis.