When banks dispense fake currency

Pushpa Girimaji

Last week I withdrew Rs 5,000 from an ATM — got four notes of Rs 1,000, one of Rs 500 and five of Rs 100. After purchasing some household goods when I handed over a Rs 1000 note, the shopkeeper checked it and said it was counterfeit. I was quite shocked. I took it to a nearby bank and it confirmed that it was counterfeit. What can I do now? I am not a rich man who can easily dismiss such a loss?

This is really unfortunate. As per the Reserve Bank of India directive issued to all banks, cash receipts in the denominations of Rs 100 and above should not be put into re-circulation by banks without the notes being ‘machine processed’ for authenticity. Says the banking regulator, in its Master Circular of July 1, 2015 on ‘Detection and Impounding of counterfeits’: “In order to obviate complaints regarding receipt of counterfeit notes through ATMs, and to curb circulation of counterfeits, it is imperative to put in place adequate safeguards/checks before loading ATMs with notes”.

The regulator also warns banks that “Dispensation of counterfeit notes through the ATMs would be construed as an attempt to circulate the counterfeit notes by the bank concerned.” Obviously not every bank takes this directive of the regulator seriously and the sufferer is the consumer.

I suggest that you complain to the bank from whose ATM you got the currency, along with the ATM receipt or even the message on your mobile about this ATM withdrawal. The bank will refuse to accept that the fake note came out of their ATM, but you insist and give them a letter with a copy of the currency and get an acknowledgement from them.

Your argument should be simple — if the bank had complied with the RBI’s mandate, there would not be any such counterfeit notes in the ATM. So the bank has to take responsibility for its action or inaction and make good your loss. Send a complaint to the Reserve Bank also and to the nodal officer of the bank.

I would also suggest that you seek from the bank (under the Right to Information Act) information on the measures put in place by the bank to prevent circulation of fake notes through the ATMS, number of fake notes received by the bank during the financial year and also the number of complaints of counterfeit notes released by their ATM. The information, I am sure will help in nailing the bank.

I would also suggest that you complain to the RBI and also the local police, so that (hopefully) they investigate into the matter and their investigation may also help you.

I must mention here that as per the data given by the finance ministry in reply to a parliament question on May 6 this year, the number of fake notes of Rs 1,000 denomination is on the increase — from 98,459 in 2012-13 to 143099 in 2015-16. This is worrying because the higher the denomination, the greater the loss to the consumer, if he or she gets such a note through the ATM or elsewhere.

Have there been such cases before the consumer court? Can I seek redress from them?

I remember a case decided by the Andhra Pradesh State Commission in 2008, wherein a retired school teacher, who had encashed a cheque of Rs 1 lakh from a bank branch, was given counterfeit notes to the tune of Rs 37,500. When he took the entire bundle to deposit in another branch of the same bank, the bank argued that it was the duty of the customer to check the veracity of the notes and refused to replace the counterfeit, forcing him to eventually seek the help of the consumer court. Asking the bank to make good the loss suffered by the consumer, the Commission criticised the bank for trying to make the teacher pay for its mistake of accepting counterfeit notes from two persons, as shown by police investigations later.

I must mention that consumer courts have clearly held that violation of the regulator’s directives constitutes deficiency in the service rendered and a consumer who suffers on account of such deficient service is entitled to compensation. Meanwhile, since this problem is not likely to go away quickly, banks should equip ATMs with the ability to detect imitations. That would make life easier for consumers! I would also suggest that consumers learn how to identify a fake and as far as possible check these at the ATM and hold up the counterfeit ones to the CCTV camera to prove that it came out of it.