signicance of FICNs in impacting the national security of India, FICN networks have
become a fascinating and an interesting topic for the erudite.
Currency counterfeiting is as old as the printing of currency in India. The history of
Indian currency dates back to 1770, when Bank of Hindustan introduced paper money.
Bank of England introduced the currency notes in the year 1862. Later, printing of
currency notes was started at Bank Note Press, Nasik Road, in the year 1928. Reserve
Bank of India (RBI) took over control of Bank Note Press in 1934.
Historical citations of counterfeiting in ancient India are not uncommon. Kautilya, a
great strategist, who lived in 300 BC, counterfeited one Magadhan coin (the currency of
the Nanda kings who ruled Pataliputra) into eight coins by reminting them, using cheap
metal (Sadasivan, 2011, p. 41). Thus, he bought a boy named Chandragupta for 1,000
Magadhan coins. Chandragupta who became Kautilya’s protégé was later enthroned as
the emperor of Pataliputra under the mentorship of Kautilya. Kautilya also authored
“Arthasastra”, which became one of the important treatises of political science in ancient
India, where he lays down punishment for counterfeiting coins.
In most recent history, independent India has been plagued by counterfeit currency
from 1980s. The rst ever counterfeit currency was discovered in India in the 1980s.
Oblivious to the future potential extent of the problem, nobody fathomed or foresaw the
gravity of the issue which was going to unfold in the coming years.
Similarly and concomitantly, global instances have also buttressed the theory that
counterfeiting currency is an international phenomenon. During the Second World War
in 1942, an ingenious German Secret Service commander named Bernhard Kruger
orchestrated a plan to ood the UK with counterfeit British Pounds. This later came to
be known as “Operation Bernhard”.
In the contemporary era, North Koreans mastered the art of printing South Korean
currencies in the 1960s and, more recently, the US dollars known as “Super Dollars”(Perl
and Nanto, 2007;Nanto, 2009). North Koreans refer to the counterfeit dollars as Kattalio
and the trade associated with them as the Kattalio Game, which earned them US$15-25m
in prots per annum.
Hence, to understand this deep-rooted global phenomenon in India, investigations
and studies about counterfeit currencies have to take into account two dimensions – the
extent of the penetration and the network and its linkages.
Extent of the penetration
Due to the criminal nature of the activity, evaluating the true extent of the problem may
not be possible. Previous attempts to estimate or measure the extent of the fake notes in
the market have not been conclusive. However, governments and individual experts
have attempted to estimate the stock and map the extent and trends of their respective
countries’ fake currencies in the market. Central banks of countries like Canada (Fung
and Shao, 2011a,2011b), Australia (Cowling, 2011), the USA (Judson and Porter, 2010;
Williamson, 2002) and India (Bose and Das, 2013) have all conducted studies on
counterfeit currencies. Apart from these studies, which are conducted by currency
management authorities, other research institutions have conducted studies related to
this realm. The present convention to identify the incidence or oating levels of fake
notes which is widely followed and which is accepted in calculating the fake notes
detected against the total notes in circulation (NIC), which is denominated as fake notes