The government’s move to remove the high currency notes of Rs 500 and Rs 1,000 note has delivered a big blow to Pakistan-based syndicates who were producing fake notes and pumping them into India, via Punjab, Nepal, and Bangladesh. However, investigative officers have revealed that another major security threat is on the horizon. Sources say these syndicates still have the capacity to produce high quality fake Rs 100 notes and are likely to flood the Indian market in the coming few days.

“The equipment, printing machines, and paper to imitate the old Rs 500 and Rs 1,000 note has now been left redundant due to demonetization. But Pakistan still has the system to imitate Rs 100 notes. Though these are of lower value, they will be used to their optimum capacity to destabilise our economy,’’ said a National Investigation Agency (NIA) official.

The NIA, tasked to investigate terrorism cases including those related to FICN, has in its investigations ascertained Pakistan to be the principal source of printing high quality counterfeited notes of three denominations: Rs 1,000, Rs 500 and Rs 100 and smuggling it in India. Since the old notes of Rs 100 denomination are still in circulation will not have any new design or additional security features the NIA, security, and other intelligence agencies, fear bulk pumping in this denomination from Pakistan-based syndicates. The threat is even more dangerous as since the announcement of demonetization, there has been a currency crunch of Rs 100 in the market. Security officials fear that in such an atmosphere if a big cache of counterfeited Rs 100 denomination is pumped into the India economy, it is likely to be lapped up as people are in need of it.

Even before the demonetization measures, the Rs 100 note has been targeted by syndicates. The RBI’s currency management report released in August this year shows that denomination-wise the Rs 100 note constitutes 17.5 per cent of the total banknotes in circulation.

The report also points out that the detection of counterfeit notes of Rs 100 has increased in the last two years. In 2014-15, the RBI detected 1,81,799 number of Rs 100 counterfeited notes from the total of 15,026,000,000 in circulation of the same denomination. This number increased to 2,21,447 fake Rs 100 notes in 2015-16 out of a total of 15,778,000,000.

“The agencies in Pakistan dealing in FICN will not stop replicating Rs 100 notes,’’ the senior NIA officer said. He added,“This note is not the menace that higher denomination notes would have been, but it’s a threat that exists.”