Rs 500 fake notes rose by 37% in FY25: RBI

New Delhi: The Reserve Bank of India (RBI) has reported a sharp 37.35% increase in counterfeit ₹500 notes detected in the banking system during FY25, raising fresh concerns about the efficacy of India’s currency management policies.

The annual report highlights that 117,722 fake ₹500 notes were seized, the highest in six years, even as the overall detection of counterfeit currency declined marginally.

Key findings from the RBI Report:

1. ₹500 Notes Lead Counterfeit Surge: Fake ₹500 notes (excluding demonetised notes) rose to 117,722 pieces in FY25 from 85,711 in FY24.

2. Overall Decline: Total counterfeit notes detected dropped to 217,396 in FY25 from 222,638 in FY24, continuing a multi-year downward trend.

3. Mixed Trends in Lower Denominations:
– ₹200 fakes increased by 13.9% to 32,600 pieces.
– ₹100 fakes fell by 23% to 51,069 pieces.

4. ₹2000 Notes Phase-Out Impact: Counterfeit ₹2000 notes plummeted by 86.5% to 3,508 pieces, down from a five-year high of 26,035 in FY24, following their withdrawal from circulation.

Demonetisation’s lingering shadow

The report reignites debate over the long-term impact of demonetisation, announced abruptly by Prime Minister Narendra Modi on November 8, 2016. The move, intended to curb black money and counterfeit currency, disrupted the economy and left lasting scars.

– The ₹2000 note, introduced post-demonetisation as a temporary measure, was abruptly phased out starting May 19, 2023. By April 30, 2025, 98.24% of these notes—worth ₹3.56 trillion initially—had been returned, rendering the exercise largely symbolic. Critics argue the repeated policy flip-flops reflect poor planning and wasteful expenditure.

Expert reactions
Economists point to the rise in ₹500 counterfeits as evidence of shifting criminal focus. “The decline in ₹2000 fakes was expected after withdrawal, but the spike in ₹500 fakes shows counterfeiters adapt quickly,” said a banking analyst.

RBI’s stance
The central bank maintains that counterfeit detection mechanisms have improved, citing the overall decline in fake notes. However, the data underscores persistent challenges in securing India’s currency system.