RBI reports sharp increase in fake ₹500 notes

The number of fake currency notes found in India’s banking system increased during the financial year 2025-26, mainly because of a sharp rise in counterfeit ₹500 notes. According to the latest report by the Reserve Bank of India (RBI), banks detected around 2.3 lakh fake notes during the year, compared to about 2.17 lakh in 2024-25.

Their number of fake ₹500 notes increased by more than 20%, reaching nearly 1.42 lakh notes, the highest of all notes. This made ₹500 notes the largest share of all counterfeit currency detected in the country.

Counterfeit ₹20 notes also recorded a significant jump, increasing by almost 47%. However, fake notes of several other denominations showed a decline. The number of fake ₹200, ₹100 and ₹50 notes detected during the year was lower than in 2024-25.

The rise in counterfeit ₹500 notes comes nearly ten years after India’s demonetisation exercise in 2016, when old ₹500 and ₹1,000 notes were withdrawn. New banknotes were introduced with advanced security features to make copying them more difficult. Despite these measures, counterfeiters continue to target the ₹500 note because of its wide use in daily cash transactions.

The report also noted a sharp fall in fake ₹2,000 notes after the denomination was withdrawn from circulation. Most counterfeit notes were detected by commercial banks, while only a small percentage were identified directly by the RBI.

Apart from counterfeit currency, the report highlighted a decline in the disposal of damaged and soiled banknotes compared to the previous year.