Banks to answer for fake ATM notes in rural India

India wants to change the law that makes the holder of counterfeit currency responsible.

Reserve Bank of India Governor Duvvuri Subbarao said the central bank is working with the government to amend the law and make the source of counterfeit currency legally liable.

Banks have been flooded with complaints of counterfeit currency notes coming out of ATM machines. In such cases, it is the bank customer who suffers the loss as banks seize the notes.

"We have asked bank managers to be sympathetic and take into consideration the circumstances when a person approaches with fake notes," the governor said. Banks must check currencies for genuineness and cleanliness before putting them into ATM machines, he said.

The central bank detected 5.21 lakh pieces of counterfeit notes in different denominations in 2011-12, 20% more than in the previous fiscal, signalling a rise in circulation of fake notes and better detection techniques as well. About 93% detection of counterfeit notes was done by bank branches and customers lost their money.

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