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Reserve Bank of India Guidelines on Counterfeit Notes
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Reserve Bank of India Guidelines on Counterfeit Notes

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Questions and Answers

What regulates the Reserve Bank of India’s authority to issue guidelines on counterfeit notes?

  • Section 35A and Section 56 of the Banking Regulation Act, 1949 (correct)
  • Section 12 of the Companies Act, 2013
  • Section 25 of the Reserve Bank of India Act, 1934
  • Section 40 of the Indian Penal Code

    • What is the consequence for a bank that fails to impound counterfeit notes detected?

  • The bank will be allowed to continue operations without any loss of reputation
  • No consequence as banks are exempt from penalties
  • Only a warning will be issued to the bank concerned
  • It is construed as wilful involvement in circulating counterfeit notes and penalties are imposed (correct)

    • What should banks do once counterfeit notes are determined?

  • Destroy the counterfeit notes without documenting the process
  • Return the notes to the tenderer
  • Stamp the notes as 'COUNTERFEIT NOTE' and impound them (correct)
  • Deposit them in the bank's vault for future examination

    • How should banknotes received through bulk tenders be verified?

    <p>Through machines for authenticity</p> Signup and view all the answers

    What should be included in the records for impounded counterfeit notes?

    <p>Authentication and entry in a separate register</p> Signup and view all the answers

    What is required when detecting counterfeit notes over the counter?

    <p>Immediate examination through machines for authenticity</p> Signup and view all the answers

    What directive does the RBI issue regarding counterfeit notes found over the counter?

    <p>No credit shall be given for counterfeit notes detected</p> Signup and view all the answers

    What is the purpose of the Master Direction issued by the RBI regarding counterfeit notes?

    <p>To combine all guidelines into a single reference document for banks</p> Signup and view all the answers

    What is the purpose of branding counterfeit banknotes with a specific stamp?

    <p>To mark them for further investigation</p> Signup and view all the answers

    Which sections of the Indian Penal Code address the offense of counterfeit currency?

    <p>Section 489A to 489E</p> Signup and view all the answers

    What must be done with counterfeit notes for expert examination before court proceedings?

    <p>They should be sent to Note Printing Presses or Forensic Laboratories</p> Signup and view all the answers

    What is required from the tenderer when submitting counterfeit notes?

    <p>Name and address of the tenderer</p> Signup and view all the answers

    When must counterfeit notes detected in a bank be reported?

    <p>By the 7th of the following month</p> Signup and view all the answers

    What is the uniform size of the stamp used for branding counterfeit banknotes?

    <p>5 cm x 5 cm</p> Signup and view all the answers

    What should happen to the forged notes after criminal proceedings?

    <p>They should be returned after investigation</p> Signup and view all the answers

    What additional step is recommended after branding the counterfeit notes?

    <p>Lodging an FIR and conducting an investigation</p> Signup and view all the answers

    What is one of the primary functions of the Forged Note Vigilance Cell at the bank's Head Office?

    <p>Disseminating instructions on counterfeit notes</p> Signup and view all the answers

    How often is the FNV Cell required to submit a status report to the RBI?

    <p>Half-yearly</p> Signup and view all the answers

    Which device is essential for bank branches to detect counterfeit notes?

    <p>Ultra-violet lamps</p> Signup and view all the answers

    What action should banks take if no counterfeit notes are detected during a month?

    <p>Send a 'Nil' report to the RBI</p> Signup and view all the answers

    For how long must counterfeit notes received from police authorities be preserved by the bank?

    <p>Three years</p> Signup and view all the answers

    What kind of training is required for cash handling staff regarding counterfeit notes?

    <p>Knowledge of counterfeit detection methods</p> Signup and view all the answers

    What format should data on counterfeit notes detection be reported in Monthly?

    <p>Specific prescribed format</p> Signup and view all the answers

    Which statement correctly describes the responsibility of the FNV Cell concerning counterfeit notes detected?

    <p>It compiles and submits detection data to RBI and other authorities</p> Signup and view all the answers

    What special feature must counting machines provided for public use at counters have?

    <p>Dual display facility</p> Signup and view all the answers

    During which time frames should verification be conducted for preserved counterfeit notes at bank branches?

    <p>Biannually</p> Signup and view all the answers

    What must be included in the preservation record of counterfeit notes received from police authorities?

    <p>Case details and preservation history</p> Signup and view all the answers

    What is the timeframe within which banks should report counterfeiting incidents to the FIU-IND?

    <p>By the 15th day of the succeeding month</p> Signup and view all the answers

    What role do currency sorting machines play in the banks' operations?

    <p>Sorting out defective banknotes</p> Signup and view all the answers

    What should banks ensure before feeding sorted notes into ATMs?

    <p>They are machine examined and properly sorted</p> Signup and view all the answers

    What action must a bank branch take when a counterfeit banknote is tendered?

    <p>Issue an acknowledgement receipt after stamping the note.</p> Signup and view all the answers

    What constitutes a consolidated report for counterfeit notes detection?

    <p>A report sent for up to four counterfeit notes at the end of the month.</p> Signup and view all the answers

    What should banks do if a detection of five or more counterfeit notes occurs?

    <p>Send the notes to the police immediately and file an FIR.</p> Signup and view all the answers

    What is required to be obtained after forwarding counterfeit notes to the police?

    <p>Acknowledgment of receipt from the police authorities.</p> Signup and view all the answers

    How should banks monitor suspicious trends concerning counterfeit notes?

    <p>Through regular communication with the RBI and local police.</p> Signup and view all the answers

    What kind of investigation rules have been framed to address counterfeit currency offences?

    <p>Investigation of High Quality Counterfeit Indian Currency Offences Rules, 2013.</p> Signup and view all the answers

    What must banks ensure before ATM notes are dispensed to avoid counterfeit circulation?

    <p>The banknotes need to be machine processed for authenticity.</p> Signup and view all the answers

    What is the penalty for banks when counterfeit notes are detected in their soiled note remittance?

    <p>A penalty of 100% of the notional value of the notes.</p> Signup and view all the answers

    What is the role of the Nodal Bank Officer concerning counterfeit note detection?

    <p>To manage all counterfeit note detection-related activities and reporting.</p> Signup and view all the answers

    In case banks face difficulties with police reluctance on FIR filing, what should they do?

    <p>Contact the Nodal Officer of the designated police authority.</p> Signup and view all the answers

    How must banks handle foreign currency suspected of being counterfeit?

    <p>Forward the case to Interpol after consulting with relevant authorities.</p> Signup and view all the answers

    What method is recommended for banks to facilitate identification of individuals involved in counterfeiting?

    <p>Implement CCTV surveillance in banking areas.</p> Signup and view all the answers

    What should banks include in their monthly returns concerning counterfeit notes?

    <p>Data on detection of counterfeit notes.</p> Signup and view all the answers

    What happens if counterfeit notes are detected in the operations of chest branches?

    <p>It may lead to investigations and suspension of operations.</p> Signup and view all the answers

    What is the main objective of re-aligning cash management in banks regarding banknotes?

    <p>To prevent the circulation of counterfeit notes.</p> Signup and view all the answers

    Study Notes

    Reserve Bank of India Guidelines on Counterfeit Notes

    • RBI has issued multiple directives for banks on handling counterfeit notes to ensure effective detection and reporting.
    • A Master Direction consolidating all guidelines related to counterfeit notes has been developed for easier reference by banks.
    • Powers to issue these directives are derived from Section 35A and Section 56 of the Banking Regulation Act, 1949.

    Detection and Handling of Counterfeit Notes

    • Banknotes presented over the counter must be checked for authenticity using machines.
    • No customer account credit is permitted for counterfeit notes detected in transactions.
    • Detected counterfeit notes should not be returned to the tenderer or destroyed; they must be impounded by the bank.

    Impounding Procedures

    • Confirmed counterfeit notes are stamped "COUNTERFEIT NOTE" and recorded in a designated register.
    • A receipt acknowledging the counterfeit note must be issued to the person who tendered it, even if they do not wish to sign.

    Reporting Requirements

    • For up to four counterfeit notes detected in a single transaction, a monthly consolidated report is submitted by the Nodal Bank Officer to local police.
    • For five or more counterfeit notes, an immediate report and FIR must be filed with local police authorities.
    • Police acknowledgments are necessary for all notes forwarded for investigation.

    Surveillance and Monitoring

    • Banks should implement CCTV surveillance to identify those aiding in circulating counterfeit notes and monitor detection patterns.
    • Regular discussions about counterfeit detection progress will occur in state-level banking committees.

    Examination and Cash Management

    • Banks are mandated to realign cash management to ensure notes of ₹100 and above are processed for authenticity before re-circulation.
    • ATMs must be safeguarded against dispensing counterfeit notes; failure in this aspect could incur penalties against the banks.

    Establishment of Forged Note Vigilance Cell

    • Each bank must establish a Forged Note Vigilance (FNV) Cell at its Head Office to monitor counterfeit note detection and report to RBI.
    • The FNV Cell is responsible for collecting data, coordinating with police, and conducting surprise checks at currency chests.

    Detection Equipment and Training

    • Banks are required to equip branches with detection devices, including ultraviolet lamps and sorting machines for banknotes.
    • Staff training on recognizing genuine banknotes' security features is critical, with materials provided by RBI.
    • Counterfeit notes, upon identification, receive a uniform stamping to signify their status and ensure procedural compliance.

    Reporting Data to Authorities

    • Data on detected counterfeit notes must be compiled and reported monthly to the appropriate RBI office.
    • Principal Officers of banks must report cash transactions involving counterfeit notes to the Financial Intelligence Unit of India (FIU-IND) as per regulations.

    Preservation of Counterfeit Notes

    • Counterfeit notes received from police or courts must be securely stored, with a record maintained for three years.
    • Notes involved in litigation should be preserved until the conclusion of court cases.
    • The Indian Penal Code includes provisions prohibiting counterfeit currency production and circulation, with penalties outlined for violations.
    • Banks are encouraged to consult with law enforcement for investigations involving suspect foreign currency notes.

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    Description

    This quiz explores the guidelines issued by the Reserve Bank of India regarding counterfeit notes. It focuses on the Master Direction that consolidates various directives for banks, ensuring they have a comprehensive resource for current instructions. Participants will learn about the regulatory framework and important sections of the Banking Regulation Act that empower the RBI.

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