New Delhi: Migrant labourers are emerging as the new couriers in the circulation of fake notes in India, according to the latest study of fake Indian currency notes (FICN) by the Central Economic Intelligence Bureau (CEIB).
Mint has reviewed a copy of the report which alerts other security establishments in the country about the easy acceptance of fake notes, including even by the Reserve Bank of India (RBI).
The report says that Bangladesh and Thailand are emerging as key conduits through which counterfeit currencies are being routed into India. While the border with Bangladesh, the longest India has with any neighbouring country, is being used to target migrant workers, counterfeit currency obtained from Thailand is deployed through coastal states. This traffic through these routes is estimated to account for around one-third of what is smuggled into India and is replacing traditional sources such as Pakistan and Nepal.
According to the CEIB report, the reason for this shift is Pakistan’s military spy agency Inter-Services Intelligence (ISI) having partly outsourced counterfeiting.
“ISI appears to have developed a well-established network of agents in Bangladesh for FICN circulation and also supplies partly-printed FICN from Pakistan for further value addition in Bangladesh like printing of RBI mark...before circulating the same into India,” it said.
Consequently, the distribution network has acquired a “transnational status”, which “extends from China, Thailand in the east to UAE in the west with Dubai, Dhaka, Kathmandu, Bhutan, Colombo and Bangkok”, making it very difficult to police.
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Making detection even more difficult is the recent practice of using residents, some of them migrant workers, in the bordering districts as couriers.
“It is noticed from FICN reports received in the bureau from various states that residents of districts in West Bengal and Tripura bordering Bangladesh...are involved in the smuggling/circulation of FICN and arrested in places like Tamil Nadu, Kerala, Bihar, Uttar Pradesh and Maharashtra, etc. In these cases, it is noted that Bangladeshi nationals come across the border for day-to-day purchasing and use FICN in their transaction,” the report said.
A different method is used for migrant workers with bank accounts. Money is deposited in the account, part of which is used to buy fake currency in small batches—about Rs200 for Rs1,000 in counterfeits. Since the fake currency notes are used in small batches by the migrant workers to fund daily consumption needs spread across the country, they are almost impossible to detect, an official said.
“It may be at a low scale now, but there is little we can do once it attains the scale of an organized racket,” the same official added.
Furthermore, the quality of the counterfeits is such that fakes have even slipped past the defences of banks and RBI, the report said.
“Counterfeit notes (Rs1,000 and Rs500) were detected in the banking channel in which many of the features of genuine notes were present,” the report said.
Similar apprehensions were expressed by the Intelligence Bureau, Research and Analysis Wing, Directorate of Revenue Intelligence and the Central Bureau of Investigation in a white paper released earlier this year and reported by Mint on 8 August.
Another trend identified by CEIB is that fake currency is mostly being detected by banks and not the enforcement agencies. Only about 28% of the total seizure of counterfeits was effected by these agencies, it said.
Electronic transactions are the only solution, said Ashish Das, professor in the department of mathematics at the Indian Institute of Technology, Bombay, and the author of a 2010 paper on cashless payment systems.
“Once you have a robust and a scalable authentication system in place for electronic or digital transfer of money, this problem can be considerably reduced,” he said.
Das said Unique Identification (UID) or Aadhaar-enabled bank accounts and payment systems could also be one of the ways of promoting cashless transactions.
“The UID-based micro-ATM model (where money can be withdrawn anywhere, anytime), once scaled, could lead to reduction of fake currency in circulation,” he said.ATMs are automated teller machines.
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Surabhi Agarwal and Sahil Makkar contributed to this story.