Islamic Terrorism in India

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169,000 crore counterfeit currency in India, pose serious threat to worth of Indian Rupee

Posted by jagoindia on January 19, 2009


“According to a recent Government estimate, counterfeit currency amounting to Rs 169,000 crore is floating around in the Indian financial system.”

Fake notes, real problem
dailypioneer.com
Sunday, January 18, 2009

To what degree is counterfeit Indian currency becoming an instrument for terror networks? Saswat Panigrahi goes investigating, and returns alarmed

The use of “supernotes” — counterfeit currency or fake rupees — by terrorist syndicates could be seriously undermining India’s war against terror. A smart replica of an authentic note, prepared using the same paper and the same ink, counterfeit currency could seriously devalue the real worth of the Indian currency.

The idea is not a new one. Historically, nations have used the counterfeiting of money as a means of warfare. Britain did this during the American War of Independence, to reduce the value of the Continental dollar. The United States did it during the Civil War against the rebellious Southern States. Times have changed. Now counterfeiting of money has become an ingredient of the terror agenda.

According to a recent Government estimate, counterfeit currency amounting to Rs 169,000 crore is floating around in the Indian financial system. From real estate transactions to ordinary grocery shopping, these bogus notes are being deployed everyday — sometimes innocently, sometimes with a sinister objective. “In 2008, the CBI registered 13 cases having international/ inter-State ramifications relating to the recovery/ seizure of fake Indian currency notes,” says Central Bureau of Investigation (CBI) spokesperson Harsh Bhal.

According to the National Crime Record Bureau (NCRB), between January and August 2008, 1,170 cases had been registered across the country in connection with fake currency. Bogus notes with a face value of Rs 3.63 crore had been seized. NCRB data shows 2,204 such cases were reported in 2007.

Intelligence agencies see the counterfeit rupee attack as a form of “economic terrorism”. They have traced many of the fake currency operations back to Pakistan’s Inter-Services Intelligence (ISI) and its ancillary crime syndicates such as the Dawood Ibrahim gang. With a multi-layered network in Pakistan, Nepal, Bangladesh, the United Arab Emirates, Sri Lanka and also inside India, counterfeit notes enter India in all three ways — through land, sea and air.

Intelligence officials say the ISI uses terrorist groups such as the Lashkar-e-Tayyeba (LeT), the Jaish-e-Mohammad (JeM) and the Harkat-ul-Jihad-al-Islami (HuJI) to smuggle and circulate counterfeit currency in India.

A large chunk of fake currency comes in through India’s borders with Pakistan and Bangladesh. The frontier with Pakistan in Jammu & Kashmir, Punjab, Rajasthan and the porous border with Bangladesh in West Bengal, Assam and the Northeast make for entry points. The Uttar Pradesh-Bihar border with Nepal is another route for the inflow of fake currency.

Sea-borne consignments also turn up in Tamil Nadu (from Sri Lanka) and in Gujarat (from Pakistan). Additionally, bogus notes are flown in from Dubai.

Local criminal networks are activated for the purpose. In Rajasthan, for instance, fake currency operations are closely linked to satta (gambling) and opium smuggling. Indirectly, this drug smuggling ends up financing terrorism in Pakistan.

In Dubai, two key Dawood lieutenants — Aftab Bhakti and Babu Gaithan — run operations. The money is transported to India in regular flights, through ordinary passengers. Indian labourers who work in Dubai are the usual targets. The racketeers focus on those who are in need of money to purchase return tickets. They arrange tickets and ask for a favour: “Deliver our cargo to India.”

The passengers are handed ordinary suitcases, with perhaps perfume bottles and clothes packed inside. A false bottom conceals the fake currency, wrapped in carbon paper or hidden in photo albums. From Dubai, the fake currency consignments reach two major transit points — Mumbai and Hyderabad.

In India, counterfeit currency has long been seen as a source of funding for terrorism. Investigations into at least four cases — the Hyderabad bombings of August 2007; the attack on the Indian Institute of Science, Bangalore, in December 2005; the Ahmedabad bombings of July 2008; and the 26/11 terror attack on Mumbai — revealed a link.

Dangerously, the counterfeiters have managed to find their way into the official banking system. “Perhaps there is no better way to pummel India’s economy,” says an intelligence official. He explains the modus operandi. Fake currency operatives usually deposit the notes during peak hours when bank tellers are pressed for time and liable to make mistakes.

A few months ago, fake currency amounting to nearly Rs 3 crore was found in the chest of the State Bank of India’s Domariaganj branch in Uttar Pradesh’s Siddarthnagar district. Some fake notes were also found in the currency chest of ICICI Bank’s Sanjay Place branch in Agra. The examples can go on.

Where are the fake notes printed? A CBI report to the Finance Ministry suggested that the Pakistan Government printing press in Quetta (Baluchistan) was churning out large quantities of counterfeit Indian currency.

Karachi’s security press, and two other presses in Lahore and Peshawar, have also been suspected.

Reports say the paper for the fake notes is sourced from London. Indian investigators also allege the Pakistani Government imports currency-standard printing paper far in excess of official needs. The extra quantum is handed over to the ISI, it is believed.

The fine quality of Pakistan-produced fake currency has alarmed India. Printed on security paper, the sophistication and craftsmanship is of a high order. “Only a specialist can make out the notes as counterfeit,” says an intelligence official. The fake notes duplicate serial numbers and floral designs of genuine notes. In addition, they even have the security wire or “guide wire” — the common man’s mode of authenticating a currency note.

However, there remain some printing misalignments. The Reserve Bank of India has issued guidelines containing features, which can help the common man establish whether the currency is fake or genuine (see graphic).

So far the Government of India has not been able to put in place a comprehensive mechanism to check the entry and spread of fake currency. On their part, security agencies are clamouring for intense scrutiny of India’s banking system. They are not sure what it hides.

The RBI is contemplating enhancing security features in Indian rupee notes. It also proposes to withdraw all currency notes printed between 1996 and 2000 and gradually introducing a new series of currency notes. Serial numbers of notes printed in that period have tended to be used most by counterfeiters.

However, in the larger reckoning, the problem remains. If and when India does decide to take action against Pakistan-based terror, it may find that it is not enough to destroy merely military camps. A certain currency printing press in Quetta may also need to be blown up!

3 Responses to “169,000 crore counterfeit currency in India, pose serious threat to worth of Indian Rupee”

  1. Kirit Vora said

    We feel RBI’s deliberation on suggesting bankers the use of “sorting machines” needs further attention to looking for “Genuine & Accurate fake note detectors” which work on data cum image based technology. Sorting machines are working just on image base technology which is limitedly compatible and useful just for fitness/quality sorting of notes and are too poor to detect super fake notes. Sorter just throws out large number of doubtful notes with comparatively large number of false alarms and carries very high possibility of passing super fake notes as genuine resulting into issuance of such notes at cash counters or at ATM centers.

    The kind of machines Indian Banks at cash counters needed are the machine which can verify not only the images but also can check the chemical and physical properties of papers, inks, resins and other materials used in production of note. The machine should be capable of not allowing any fake note to pass as genuine. It is possible only with the detectors specially developed considering the large number of intricacies concerning to Indian notes. A multi currency super fake note detector/ Currency verification & processing Systems is recently launched by an Indian company having web address http://www.paradigmcashsystems.com It is suggested therefore that all the concerned authorities form RBI, Government of India, Banks investigative agencies etc should invariably go through the crucial informations provided in the web site. It could help in curtailing the menace of fake notes prevalent in our country.
    kirit vora

  2. shashikant kulkarni said

    If we are not doing same to Pakistan and China (making their fake currency) may be we should start doing.We have enough tallent.Only thing we lack is will.

  3. Shreeraj Nair said

    Any currency, if printed, are subject to counterfeit. Could we consider a paradigm shift in Currency from paper to electronic. The risks are due, but worth thinking. That would ensure there is a proper record of any transaction, no Chillar/Chutta / Change issues, no dirty/torn notes circulating, no printing cost, no circulation & storage cost and associated security, no counterfeit because nothing to fake from etc. Challenges include concieving the idea by masses, implementation, initial inertia, IT security, data security, software malices etc. But when considering current troubles, these are manageable chunks.
    Jai Hind!!

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