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Fake notes: RBI warns paper and ink suppliers
Highlights
Fake notes: RBI warns paper and ink suppliers. The Reserve Bank of India (RBI) has raised concerns over currency paper and security ink produced by international suppliers falling into wrong hands, which is resulting in high quality fakes. Calling for cross-border cooperation in regulating suppliers, RBI has warned that it would have to go in for higher indigenization if vendors do not adopt \'know your customer\' norms while selling.
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MUMBAI: The Reserve Bank of India (RBI) has raised concerns over currency paper and security ink produced by international suppliers falling into wrong hands, which is resulting in high quality fakes. Calling for cross-border cooperation in regulating suppliers, RBI has warned that it would have to go in for higher indigenization if vendors do not adopt 'know your customer' norms while selling.
RBI's tough talk will have an impact in the global market as India is the largest producer of currency notes. With 7,647 crore notes printed every year, India generates more than double the notes printed in US and nearly five times as many notes printed in the European Union.
"If the counterfeiters are able to do a good job of producing duplicate currency, they are obviously having access to good quality currency paper, printing ink and other components that are necessary for production of banknotes. So, the question is, what is the source of supply for the fraudsters and what is the role of vendors in perpetration of these unlawful activities," said RBI deputy governor K C Chakrabarty at the Banknote Conference 2014 in Washington earlier this month.
"Vendors must join hands to find out who has supplied ink, paper, or machinery to counterfeiters which would enable the regulators to take appropriate action," he said.
"Finding a long-term solution to this menace may also require close cross-border cooperation between various countries. The global vendors have, in fact, the maximum stake in ensuring that these problems are countered at the earliest," he said. Chakrabarty pointed out the vendors have made significant investments in building capacities. "They are the least cost producers of the various ingredients/components used in production of banknotes and any attempt by individual countries at creating manufacturing capacities could prove inefficient, and in many cases, wasteful investment," he said.
The overall market for inputs for currency notes is roughly $27 to 28 billion with India accounting for a significant chunk. "So, while the opportunities for the vendors are immense, I would also take this opportunity to request all the manufacturers, suppliers, vendors in the banknote industry to put their minds together and come up with ideas on not only reducing the cost of paper, ink, and machines, but also for enhancing the durability of the banknotes through technological innovations," said Chakrabarty.
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