How to Identify Fake Currency Notes and What You Should Do About It

Dear reader, last night, while paying the auto driver, I realized my bank server was down, meaning I couldn’t use the UPI apps to make payment. Left with no other option, I handed him a ₹500 note. He took one glance and returned it, saying, “It’s fake.”

Surprised, I asked him how he could tell so quickly. With a tired sigh, he pointed out inconsistencies in the font style and grumbled about dealing with fake notes almost every day. That moment got me thinking—how many people unknowingly receive counterfeit currency, only to discover it when it's too late?

So, we decided to dig deeper into the world of fake notes. It turns out that thousands of Indians fall victim to counterfeit currency daily. This guide will help you identify fake notes with simple yet effective checks so you never get caught off guard.

How to Identify a Fake Currency Note

1. Mahatma Gandhi’s Watermark

One of the easiest ways to check the authenticity of an Indian banknote is by examining Mahatma Gandhi’s watermark. In genuine notes:

• The watermark is embedded into the paper during the manufacturing process and is visible when held against the light.
• The image appears clear, with no distortion or extra thickness.
• Fake notes often have a blurry, greasy, or rough image due to poor reproduction methods.

How to Check: Hold the note against a light source and ensure that the watermark is distinct and consistent with the denomination.

2. Security Thread

The security thread is a crucial feature that runs through the note. In real currency:

• The security thread is partially visible and appears as a broken line under normal light.
• When tilted, it appears continuous and shows inscriptions such as “भारत” (Bharat) and “RBI.”
• Counterfeit notes often have a printed imitation of the security thread, which lacks depth and shifting effects.

How to Check: Hold the note at an angle under a light source and observe the thread for embedded text and colour shifts.

3. Ink Quality and Printing Precision

Authentic notes have high-quality ink and precision printing. Signs of fake currency include:

• Smudged ink or broken lines.
• Discoloration or dull text that appears faded.
• Uneven printing where some letters or numbers are not properly aligned.

How to Check: Closely examine the print clarity under good lighting. The edges of images and text should be sharp, not blurred.

4. Formatting and Serial Numbers

Every currency note has a unique serial number. Genuine notes maintain:

• Uniform font size, spacing, and alignment.
• Perfectly aligned numerals without uneven gaps.
• Counterfeit notes often have misaligned numbers or inconsistent fonts.

How to Check: Compare the serial number with another genuine note of the same denomination to spot irregularities.

5. Typography and Micro-lettering

Micro-lettering is a special feature that appears in small font size, visible only under magnification. On real notes:

• The words “RBI” and the denomination appear between Mahatma Gandhi’s image and the security thread.
• The text is sharp and well-defined.
• Counterfeit notes often have blurred, missing, or misspelled micro-lettering.

How to Check: Use a magnifying glass to examine the micro-lettering.

6. Devanagari and Regional Languages

Indian banknotes display the denomination in both English and Devanagari on the front, with the reverse side featuring 15 regional languages. Counterfeit notes may:

• Have inconsistent font styles.
• Show missing or poorly printed regional language scripts.

How to Check: Compare the denomination script with an authentic note and look for printing inconsistencies.

7. Intaglio (Raised) Printing

Genuine currency notes feature raised printing that can be felt by touch. This includes:

• The Mahatma Gandhi portrait.
• The Ashoka Pillar emblem.
• Braille identification marks for visually impaired individuals.
• Counterfeit notes often have flat or indistinct embossing.

How to Check: Run your fingers over the note. Authentic notes will have a textured feel, whereas fake notes may feel smooth.

What to Do If You Receive a Fake Currency Note?

If you suspect that a currency note is counterfeit, follow these steps:

• Do not attempt to use it – Using counterfeit currency knowingly is a punishable offense under Section 489C of the Indian Penal Code.
• Report it to the nearest bank or police station – Banks are required to confiscate counterfeit notes and report them to the Reserve Bank of India (RBI).
• If received from an ATM, inform the bank immediately – Show the note to the CCTV camera at the ATM and keep your withdrawal receipt for reference. 
• Spread awareness – Educate friends and family about identifying fake notes to prevent further circulation.

Will the Bank Issue a New Note If You Submit the Counterfeit or Fake Note?

If you have received fake note from ATM, here’s what you should do.

• Place the note to the CCTV camera at the ATM and keep your withdrawal receipt for reference. 
• Deposit the fake note and transaction receipt at the bank (any bank branch of the ATM).
• The bank will ask you to fill a form and will provide a new note against the fake note.

If you have received fake note from any relative, friend or during any personal transaction, unfortunately you can’t do anything unless you have strong proof that you have been deceived. That said, if you receive a bundle of counterfeit notes, you can inform your nearest RBI Issue Office or Police Station. Do not try to hide or pass on fake notes – it’s punishable under Section 489C – you may face a hefty fine or imprisonment ranging from 7 years to lifetime imprisonment. 

What Banks Do with the Fake Notes?

RBI has a comprehensive directive on the protocols banks must follow upon receiving fake notes. You can read it here.