What should you do immediately if a bank tells you a note is fake?
When a bank staff member tells you a note is fake, a specific legal process begins. The bank is required to impound the note — they cannot give it back to you and they cannot refuse it and ask you to leave. They must issue you an acknowledgement receipt, file an FIR with local police, and report to RBI. You are not being arrested. You are not a suspect unless specific evidence of knowledge is established. Your immediate priorities: get the acknowledgement receipt and note the staff member's name and designation.
What the bank is legally required to do
RBI's Master Circular on Detection and Impoundment of Counterfeit Notes prescribes a mandatory process for banks. When a note is found to be counterfeit: the bank staff must impound the note immediately. They must issue an acknowledgement receipt to the person who tendered the note, showing: the amount of counterfeit notes impounded, their denominations, and the date of impoundment. They must report the detection to the police. They must report to RBI. The notes are preserved as evidence.
A bank staff member who refuses to impound a counterfeit note and simply hands it back — or refuses the note without giving an acknowledgement receipt — is not following RBI's mandatory circular. If a bank behaves this way, report the non-compliance to RBI through its complaint mechanism.
What you should do — the first 10 minutes
Step 1: Stay calm. A bank teller telling you a note appears counterfeit is performing their mandatory duty, not accusing you of a crime. Being defensive or aggressive makes the situation worse and draws more attention to you.
Step 2: Ask for the acknowledgement receipt immediately. This is your right under RBI's circular. The receipt establishes that you tendered the note to the bank and that the bank impounded it — it documents the transfer of custody from you to the bank.
Step 3: Note the name or ID of the bank staff member who identified the note. Note the time and date. If other notes in the same bundle are also flagged, note which ones.
Step 4: Explain how you received the note — calmly and without embellishment. 'I received this note as change from [source] on [date].' This is not an admission of guilt; it is providing context for the investigation.
Step 5: If police arrive and question you — cooperate. Provide the acknowledgement receipt, explain how you received the note, and if you have any documentation of the receipt (purchase records, bank statements), provide it. Remember: Umashankar (SC 2001) protects you if you genuinely did not know the note was counterfeit.
If the bank says your note is fake — immediate actions Stay calm — you are not being arrested at this stage Ask for the acknowledgement receipt — this is your mandatory right under RBI circular Note the name/ID of bank staff who identified it, time, date Explain calmly how you received the note — source and date If police arrive: cooperate fully; provide acknowledgement receipt Document everything immediately after leaving the bank (notes, photos of receipt) Contact a lawyer if police register an FIR against you |
Laws & authorities referenced in this chapter
RBI Master Circular on Detection and Impoundment of Counterfeit Notes — mandatory bank procedures
BNS 2023 — §179, §180 (mens rea required for conviction)
Umashankar v. State of Chhattisgarh — SC 2001 — innocent possession protection
Bank detects counterfeit: bank MUST impound it (cannot return or refuse without receipt). Bank MUST issue acknowledgement receipt — demand it. Bank MUST report to police and RBI. You are not automatically a suspect — Umashankar principle applies. Immediate priorities: get acknowledgement receipt, note staff details, explain receipt source calmly. If FIR registered against you: contact lawyer. Documentation of innocent receipt is your protection.
This is educational content, not legal advice. For a specific situation, please consult a qualified legal professional. Excerpted from Currency, Coins & The Law by Mayank Agarwal, Part 13: Coins & Counterfeiting — The Coinage Act Framework and the Law Against Fake Currency.