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ISI unloads counterfeit notes in Bombay

After an aborted attempt to destroy the Indian economy by engineering serial blasts in Bombay in March 1993, the Inter-Services Intelligence of Pakistan has now launched another major offensive, by floating counterfeit Indian currency notes in Bombay -- especially of Rs 500 denomination -- on a massive scale, disclosed a top official from the Maharashtra home department.

Although intelligence agencies are unable to fathom the depth of this fiscal conspiracy, reports in this regard have revealed that the new ISI gameplan is to wreak havoc on the economy by flooding the country with fake currency notes, disclosed home ministry officials. For any such supply will be over and above the amount of currency pumped in by the Reserve Bank of India, and will push up the rate of inflation.

While the enforcement agencies have in the past busted many rackets in forged currencies of varied denominations, including Rs 100, 50 and even 20, the new ISI gameplan focuses on the largest note in the circulation in India, Rs 500 which is referred to in Bombay's patois as takla (so called thanks to the imprint of Mahatma Gandhi on the note).

Intelligence agencies believe that a colossal amount of Rs 500 notes, even to the tune of several million rupees, is currently floating in the market. So far, however, very few instances have come to light.

• On September 23 last year, Bombay's special squad from zone-II, led by the hotshot-cop, assistant police inspector Vijay Salaskar (of the Amar Naik and Sada Pawle encounter fame) from Nagpada police station in Bombay, busted a fake currency racket. Salaskar's team arrested five men and seized over Rs 2,25,000 worth of Rs 500 notes from them. The racket had its roots in the capital of mountain kingdom of Nepal, Kathmandu. ISI subversives are known to sneak in guns, drugs and other deadly material into the country through the porous borders of Nepal via the northern villages of Uttar Pradesh.
• On October 24 last year, the JJ Marg police station in Bombay had arrested two men and seized Rs 500,000 worth of Rs 500 notes from them.
• On February 16, this year, the Ghatkopar police laid a trap and arrested four men and seized Rs 1,90,000 worth of Rs 500 notes from them.

The investigation in the last two cases were transferred from the local police stations to the Economic Offences Wing, a specialised cell of the crime branch of the Bombay police. In the first case, the deputy commissioner of police, zone-II, Param Bir Singh had himself conducted the investigations and submitted a detailed file to the police commissioner, Ronald Mendoca. The report also mentioned that production of the currency seemed to be the handiwork of the ISI.

Although the assistant commissioner of police, EOW, Madhukar Ghorpade maintains that Rs 500 denomination notes are impossible to fabricate as they go through at least four different processes of manufacture, with its inimitable watermark (for which reason, perhaps, they are printed at the RBI's Devas press near Nashik), other police officers opine that even the Rs 500 note can be cloned, with the quality of reproduction being as good as the genuine article.

"The quality of notes seized by us were of such a high calibre that they almost looked like the real ones," claimed Salaskar of the special squad. "Such quality of notes cannot be manufactured in India and can only be imported," he explained.

The modus operandi in each of the cases was more or less similar, claim the police. The currency, or at least the blocks, were made in Hyderabad or Rawalpindi in Pakistan and then transported to Kathmandu. The ISI operatives in Nepal then smuggle the currency into India across the border.

In fact, during the gruelling interrogation of Akhilesh Shah and others by the special squad, the accused have admitted that they wanted to bring in Rs 500,000 worth of currency in Rs 500 denomination. But during the cross-over, the Border Security Force men robbed them of Rs 2,75,000 -- leaving them with Rs 2,25,000, which was later seized by the Bombay police.

Once the currency was successfully smuggled into the country, it was stealthily introduced in the market. At one point in time, the markets were so rattled by reports of large-scale circulation of Rs 500 notes that people even stopped accepting the notes.

The rumour mills fanned speculation to such an extent that it led to the belief that the Reserve Bank of India would withdraw the notes from circulation altogether. The central bank had to finally deny the rumours in May this year.

But panic so gripped business and industry that businessmen refused to deal in Rs 500 notes, right from share-brokers to petty shop-keepers, not to mention banks which had stopped accepting cash deposits in Rs 500 notes. The situation was defused only when the RBI issued directives to banks and co-operative societies to accept the notes and affirmed that they were still very much legal tender. The circular was issued on June 18 by the RBI general manager, Alpana Killawala and it clearly mentioned, "...following some confusion about Rs 500 notes when some bank branches desisted from accepting these notes..."

Chief of the EOW, deputy commissioner of police, Anant Shinde, neither confirmed nor denied large-scale circulation of the fake currency in Bombay. Shinde, however, said, "It may not be that rampant. Very few cases were brought to our notice."

In fact, the city police is yet to unearth the racket in its entirety. The three cases mentioned above are, of course, the tip of the ice-berg, senior crime branch officers aver, and the ISI gameplan of "proxy war" cannot be ruled out.

Regardless of the RBI's assurances and the police perception, some shopkeepers and vendors are still wary of accepting the Rs 500 notes.

EARLIER REPORTS:
Fake currency emerges as non-military threat to India

UP at the receiving end of counterfeit notes, courtesy ISI