A case uncovered in Kolkata this week illustrates how such operations can exploit the appearance of legitimate currency without necessarily producing sophisticated counterfeit banknotes.
Kolkata Police arrested four men in connection with an alleged racket spanning Burrabazar and neighbouring Howrah after recovering four bundles carrying forged bank labels that suggested a combined value of ₹20 lakh.
But the apparent cash consignment concealed a much simpler fraud. Investigators found genuine ₹500 notes at the top and bottom of the bundles, with hundreds of pieces of white paper cut to currency-note dimensions packed between them. The actual genuine currency recovered was just ₹4,000.
The arrests began with Vijaypal Tanwar, 23, alias Arvind, and Shiva Thapa, 24, who were intercepted near the Strand Road-Mirbahar Ghat Street crossing in Burrabazar on October 27. A backpack carried by Tanwar contained the four bundles, each bearing a forged private-bank label indicating ₹5 lakh.
Interrogation led investigators to Howrah, where Sunil Kumar Verma, 47, and Gopal Gujjar, 24, were subsequently arrested. Police recovered a printer, a paper-rim cutter, two boxes of bond paper, a tape machine, scissors and ink cartridges.
The case is significant not because investigators uncovered ₹20 lakh in technically sophisticated counterfeit notes, but because the alleged operation relied on disguising paper-filled bundles as legitimate cash. It demonstrates how counterfeit-currency investigations can overlap with other forms of financial fraud and why the distinction matters.
The wider concern is emerging against a measurable increase in fake ₹500 notes detected by India’s banking system.
Fake ₹500 notes account for nearly 62% of detections
The Reserve Bank of India’s Annual Report for 2025-26 recorded 2,29,746 counterfeit banknotes detected by the banking system, compared with 2,17,396 in FY25, an increase of 5.7%.
The sharpest increase was in the ₹500 denomination, where detections rose 20.5% to 1,41,907 notes from 1,17,722 a year earlier.
The ₹500 denomination accounted for 61.8% of all counterfeit notes detected in FY26. Its share had been 54.2% in FY25 and 38.5% in FY24.
That is a rise of 23.3 percentage points in just two years, underlining the growing concentration of counterfeit-note detections in India’s most widely used high-value banknote denomination.
The comparison with other denominations is revealing.
| Denomination | FY25 detections | FY26 detections |
|---|---|---|
| ₹500 | 1,17,722 | 1,41,907 |
| ₹200 | 32,660 | 30,591 |
| ₹100 | 51,069 | 45,621 |
| ₹50 | 12,015 | 10,274 |
| ₹2,000 | 3,508 | 824 |
While counterfeit ₹500 notes increased substantially, detections of fake ₹100 and ₹200 notes declined. Fake ₹2,000 notes fell 76.5% to 824 from 3,508, consistent with the withdrawal of the denomination from circulation.
The significance of the ₹500 figure becomes clearer when compared with its position in the currency system. As of March 31, 2026, ₹500 notes represented 85.5% of the total value of banknotes in circulation and 41.2% by volume.
The concentration of counterfeit detections in this denomination therefore warrants particular attention. However, the figures do not establish that counterfeiters have become more sophisticated or that every detected note originated from a domestic printing operation.
They establish what banks detected, not the total quantity of fake currency circulating in the economy.
The RBI recorded 2,24,334 counterfeit notes detected by banks other than itself, representing 97.6% of the total. Its own detection accounted for 5,412 notes, or 2.4%.
These figures describe the institutions where counterfeit notes were detected. They should not be interpreted as evidence that counterfeit production has shifted from one geographical region or type of criminal network to another.
An important limitation is that the RBI’s banking-system figures exclude counterfeit notes seized independently by police and other enforcement agencies. Police seizures and bank detections are therefore separate datasets and cannot simply be added together to estimate the total volume of fake currency in circulation.
Nevertheless, the sharp increase in ₹500 detections provides an important backdrop to the latest investigations.
From international networks to neighbourhood operations
India’s counterfeit currency investigations have historically involved concerns about organised networks operating across borders, particularly in connection with routes through Bangladesh and alleged Pakistan-linked networks.
The National Investigation Agency’s records illustrate the scale and legal seriousness of some of these investigations.
In October 2019, the NIA registered a case following the recovery of counterfeit Indian currency worth ₹1.99 lakh in Malda, West Bengal. The seizure involved 99 fake ₹2,000 notes and two fake ₹500 notes recovered from an accused person in the Jhaljhalia area.
The case was registered under Sections 489B and 489C of the Indian Penal Code, dealing with trafficking and possession of counterfeit currency, along with Section 46 of the Unlawful Activities (Prevention) Act.
Malda and adjoining border areas have featured in investigations into organised fake-currency circulation because of their proximity to international routes. Such cases have required agencies to examine the movement of counterfeit notes, distribution networks and possible cross-border connections.
But the recent domestic seizures point to another enforcement problem: operations that may require little more than a rented room, commercially available equipment and a small number of people.
The distinction is important. A locally operated printing or bundle-making operation does not automatically have an international connection, while a cross-border counterfeit network may involve a much larger distribution structure.
Investigators must establish those connections through evidence rather than assume that every counterfeit-currency case belongs to the same criminal ecosystem.
Nagpur seizure exposes the scale of a separate printing operation
A recent investigation in Nagpur provides another illustration of the potential scale of locally operated counterfeit-currency production.
Police recovered counterfeit and partially printed ₹500 notes with a stated face value of approximately ₹85 lakh from a rented premises linked to Pushpak Krishna Bhandarkar, also known as Bendane.
According to India Today’s October 25 report, the recovery included fully printed fake notes worth ₹37 lakh and partially printed notes valued at approximately ₹48 lakh. Printing equipment and loose sheets were also found.
The investigation reportedly began after a landlord complained about unpaid rent and sought possession of the premises. A subsequent search uncovered bundles of currency and a printer.
The contrast with Kolkata is striking.
In Nagpur, investigators reportedly recovered a substantial quantity of printed and partially printed counterfeit notes. In Kolkata, the alleged operation involved genuine currency placed at the ends of bundles with paper fillers in between.
Both cases involved equipment or materials associated with preparing deceptive currency consignments, but the underlying methods were different.
The Nagpur recovery also highlights why the face value of seized counterfeit currency must be treated carefully. A bundle of partially printed notes is not equivalent to an equal amount of completed counterfeit currency successfully circulated in the market.
For investigators, the immediate priorities are to identify the intended recipients, determine whether any notes entered circulation and establish whether the accused had suppliers, distributors or links to other operations.
Why smaller operations complicate enforcement
Large counterfeit-currency networks can be investigated through intelligence about financing, transportation, international routes and established criminal connections.
Smaller operations present a different challenge. Their limited geographical footprint and relatively modest infrastructure may make them difficult to identify before they begin circulating fraudulent cash.
Commercially available printing equipment and paper-processing materials can also make the initial detection of a suspected operation more dependent on local intelligence than on the discovery of an established criminal network.
The Kolkata investigation illustrates this point. Police reportedly acted on confidential information about suspicious individuals carrying currency bundles in Burrabazar. The subsequent arrests and interrogation led investigators to the alleged Howrah premises and additional suspects.
The case also demonstrates why the term counterfeit currency needs careful application.
A technically reproduced fake banknote is different from a bundle containing genuine notes and paper fillers. The former attempts to imitate legal tender; the latter may be designed to deceive someone into accepting a package as containing a stated amount of cash.
Both can cause financial losses, but the investigative questions and relevant evidence differ.
For traders and small businesses, the practical risk is not confined to individual fake notes. Transactions involving large cash bundles, hurried exchanges or apparent bank consignments can also be exploited through deceptive packaging.
The wider enforcement response must therefore address both the manufacture of counterfeit notes and the methods used to introduce fraudulent cash into ordinary commercial transactions.
Banks remain the first detection line, but police seizures tell another story
The RBI’s figures place banks at the centre of counterfeit-note detection. The 2,24,334 notes detected by banks other than the central bank in FY26 represented almost 98% of the banking system’s total detections.
Banks are required to identify suspected counterfeit notes and follow prescribed procedures for impounding and reporting them. Customers presenting suspected counterfeit notes cannot expect them to be treated as genuine currency or returned as ordinary legal tender.
But the banking data cannot capture every transaction in which fake currency changes hands. Notes seized during police raids, recovered from suspects or intercepted before entering the banking system are recorded separately.
This is why enforcement agencies need to combine banking-system data with police intelligence, forensic examination and investigations into distribution networks.
The latest cases also underline the importance of tracing the financial trail behind local operations. Identifying who supplied equipment, financed the operation, arranged customers and distributed the material can reveal whether apparently independent cases share common links.
The National Investigation Agency’s role in cases involving suspected organised networks and the state police’s role in local investigations will remain complementary. The scale and nature of the evidence will determine whether a case has wider national-security implications.
The threat is changing, but the evidence must be separated
The latest cases suggest that counterfeit-currency enforcement is dealing with multiple types of operations rather than a single, uniform threat.
The RBI’s 20.5% increase in fake ₹500 detections is a measurable development. The Kolkata and Nagpur seizures provide examples of separate alleged domestic operations. The NIA’s Malda case documents the continuing relevance of investigations into organised counterfeit-currency networks.
But these developments do not, by themselves, prove that international syndicates are being replaced by local operators or that domestic printing accounts for the increase in fake ₹500 notes.
For India’s security agencies, the challenge is to pursue sophisticated networks that may involve cross-border financing and distribution, and smaller operations that exploit local markets and commercial transactions.
The counterfeit-currency threat may not be confined to the traditional syndicate model. The ability to detect and dismantle smaller operations before their products or fraudulent bundles reach unsuspecting users will be an equally important test of India’s enforcement system.
Shelton Rozario