MONEY COUNTERFEITING

BY ANUJ ISSAR(UM8303) EKTA AGGARWAL(UM8304) JIVJOT SINGH(UM8305)

COUNTERFEIT MONEY

A counterfeit is an imitation that is made with the intent to deceptively represent its content or origins. The word counterfeit most frequently describes forged money or documents, but can also describe clothing, software, pharmaceuticals, or any other manufactured item.

Counterfeit money is imitation currency produced without the legal

WHY IS MONEY COUNTERFEITED..?

2. Economic subversives
Sponsored by unfriendly governments Extremely high quality forgeries

Intention may be to undermine a currency for political ends or

A TOOL IN WARFARE

Nations have used counterfeiting as a means of warfare. The idea is to overflow the enemy's economy with fake bank notes, so that the real value of the money plummets.

Great Britain did this during the Revolutionary War to reduce the
value of the Continental Dollar.

HOW IS MONEY COUNTERFEITED

Before the introduction of paper money, the most prevalent method of counterfeiting involved mixing base metals with pure gold or silver.
Methods used now days include: Using photographic plates Stencils and offset printers Large printing presses and The ability to cut intricate designs by hand into metal plates.

WHO ARE COUNTERFEITERS???

Based on the level of operations, resources at disposal and there overall impact on economy.
Nuisance counterfeiters, Professional counterfeiters.

NUISANCE COUNTERFEITERS

Term used for individuals who counterfeit at small scale using photocopiers, scanners, laser printers etc. Produce small numbers of crude counterfeits and account for about 5% of counterfeit notes circulating.

PROFESSIONAL CRIMINALS

More oraganized. Have better resource or funding. Work independently or, as part of organised crime. account for 95% of counterfeit notes. Use high quality image preparation and lithographic printing.

ROLE OF TECHNOLOGY

Technology use goes both ways as it aids in both creation and detection of counterfeits notes. Higher resolution color photocopiers. Micro printing, aliasing, foil stamps, security threads. Softwares such as Photoshop, having photo enhancing tools. Ultraviolet lamps to detect fake currency. Detector pens, detect presence of starch in currency which is absent in real currency.

EFFECTS OF COUNTERFEITING

Inflation. Depreciation in value of real money. Decrease in people s confidence in the currency. Increase in illegal overseas activities in the country.

INFLATION

Increase in prices (inflation) due to more money getting circulated in the economy - an unauthorized artificial increase in the money supply. Companies are not reimbursed for counterfeits. This forces them to increase prices of commodities.

DEPRECIATION IN VALUE OF REAL MONEY

The infusion of new money would lessen the marginal value of money already in circulation, the beginnings of a new round of inflation, albeit quite small. However having been the first recipient of the new money, forger do not feel the effects of the inflation.

INCREASE IN ILLEGAL OVERSEAS ACTIVITIES IN THE COUNTRY

The fake currencies produced in other countries can be used to fund the terrorist operations in the targeted country. Most of the fake currency in India is suspected to be imported from Pakistan and Bangladesh.

DECREASE IN PEOPLES CONFIDENCE IN THE CURRENCY

Payees may demand electronic transfers of real money or payment in another currency (or even payment in a precious metal such as gold). Decrease in the acceptability(satisfactoriness) of currency.

ULTIMATELY WHO TAKES THE HIT?

Money Counterfeiting creates a vicious circle. Common man transfers money it to the bank. From bank it is routed to Federal Reserves . Federal Reserves then ultimately transfers the burden to common man in from of taxes.

EXTENT OF COUNTERFEITING IN INDIA

Around 15% of fake rupees are in circulation all over India. Major target notes are Rs 500 and Rs 1000 denomination Gandhian note of Rs 500 note is virtually undetectable to naked eye and can only be detected using specialized equipment.

INDIA IS MORE PRONE TO COUNTERFEITS

There are two factors which makes India more susceptible to counterfeiting Cash Based economy

High denomination currency

CASH BASED ECONOMY

As most of the transactions are in cash, the amount of cash that people hold is pretty high. Hence floatation of fake currency is easy amidst cash surplus. In a primitive all-cash economy, counterfeiting would indeed increase the cash in circulation and dilute its value.

HIGH DENOMINATION CURRENCY

Denomination currency means the face value of the notes available. In India these are 1, 2, 5, 10, 20, 50, 100, 500, 1000.
The basic advantages of high denomination currency are It makes high value transactions easy, Cash transactions are non traceable and hence leave no footprint. Therefore high denomination currency results in Accumulating black money created out of tax evasion. Corruption, hence life blood for parallel economy.

HIGH DENOMINATION CURRENCY (CONTD.)

However its more wide spread and more harmful impact is fake currency and its consequences which results to weakening of official currency, To print a fake currency note, the cost is about Rs. 30 to 40/-. Hence very profitable to print fake notes for the amount 1000, 500 and also 100.

High denomination results to

PREVENTIVE MEASURES

Polymer Bank notes, created with special mix of polymer compounds aided with Holograms. Have distinct non paper like feeling and last till 5 years compared to 12-15 months of a paper note. Plastic money based upon credit and debit cards. Average cost of a high quality counterfeited note is Rs 30-50 so Doing away with higher denomination notes eg Rs 500 and Rs 1000 will lower the margins and counterfeiting will be less profitable.

STEPS BY RBI

Mandates banks to install money sorting machines. Creates awareness about the security features in local languages. Vigorous advertisement campaign named Paisa Bolta hai. Training to bank cashiers to detect fakes. Launched www.paisaboltahai.rbi.org.in displaying security features of all the notes. Plans to launch plastic notes. Constant security updates in the currency.

SECURITY FEATURES IN RS 1000 NOTE