Note Sorting Machines to be Mandatory in Banks: Finance Ministry

The Finance Ministry proposes not to file FIRs (First Information Report) by banks when fake currency notes are detected. The report from the Finance Ministry recommends Reserve Bank of India (RBI) to frame a policy for mandatorily providing Note Sorting Machines (NSMs) at all bank branches with Rs.25 lakh and above cash receipts, so that, the detection of forged notes can be made at the point of entry at each counter.

It is observed that banks are generally hesitant to report fake notes to RBI or Financial Intelligence Unit – India, because of the fear of police harassment. The report suggests that bank employees must be assured that mere reporting of fake notes would not get them into trouble and they must pass information to RBI/FIU-India mandatory.

According to the RBI, there are 4,35,607 fake notes detected in 2010-11 against 4,01,476 fake notes in the previous year. Almost 90% of these fake notes were detected at bank branches and the remaining were being detected at the RBI.

So, the decision of making mandatory provision of Note Sorting Machines (NSMs) at all bank branches is aimed to improve reporting of such cases. Further, the report suggests RBI to incentivise banks for use of NSMs and other fake note detecting devices at their branches.