Detection of counterfeit currency notes in the banking system increased by 5.7 per cent during 2025-26, according to the Reserve Bank of India’s latest annual report.
The total number of fake currency notes detected rose to 2,29,746 pieces in 2025-26 compared to 2,17,396 pieces in the previous financial year.
The rise was largely driven by a sharp increase in counterfeit Rs 500 notes, which continued to remain the most detected denomination across the banking system.
Fake Rs 500 notes rise over 20%
According to RBI data, counterfeit Rs 500 notes increased by 20.5 per cent during the financial year.
Banks detected 1,41,907 fake Rs 500 notes in 2025-26, up from 1,17,722 pieces in 2024-25.
Counterfeit Rs 20 notes also registered one of the sharpest increases in percentage terms, rising 47.4 per cent to 373 pieces from 253 detected in the previous year.
However, some denominations recorded a decline in fake note detection during the year.
Fake Rs 200 notes fell to 30,591 pieces from 32,660 in the previous financial year, while counterfeit Rs 100 notes declined to 45,621 from 51,069 pieces.
Detection of fake Rs 50 notes also dropped to 10,274 pieces in 2025-26 compared to 12,015 pieces a year earlier.
Counterfeit Rs 2,000 notes continue to decline
Counterfeit Rs 2,000 notes continued to witness a sharp decline following the withdrawal of the denomination from circulation.
According to the RBI report, fake Rs 2,000 notes detected during the year fell to 824 pieces from 3,508 pieces recorded in 2024-25.
The RBI further said that 97.6 per cent of the counterfeit notes were detected at other banks, accounting for 2,24,334 pieces.
The central bank itself detected 5,412 counterfeit notes, which accounted for 2.4 per cent of the total fake notes identified during the year.
The figures released by RBI do not include counterfeit currency seized directly by police or other law enforcement agencies.
Disposal of soiled banknotes declines sharply
The annual report also showed a significant decline in the disposal of soiled banknotes during 2025-26.
According to RBI data, disposal of soiled notes fell to 1.72 lakh pieces compared to 2.38 lakh pieces in the previous financial year, reflecting a decline of around 28.6 per cent.
Among denominations, disposal of Rs 500 notes remained the highest at 59.8 lakh pieces during 2025-26, although this was lower than 89.8 lakh pieces recorded a year earlier.
Disposal of Rs 20 notes also declined to 9.8 lakh pieces from 16.50 lakh pieces in 2024-25.
Meanwhile, disposal of Rs 100 notes remained largely stable at 58.1 lakh pieces during the year, according to the RBI annual report.