Picture this. You are in a tearing hurry and you pay off the taxi guy as you reach your destination. He gives you the change, which you hastily dump in your purse and rush. Off you go to a shopping mall to buy something. You pay at the counter with the notes you just got from the taxi guy.

The salesperson looks at one of the notes with suspicion and gives you an eerie look. He checks the note against fluorescent blue light, smells, crushes and lick tests it. Yuck! You say in disgust. He declares it fake and asks you for another one.

Standing agape, you demand he takes it. He threatens to call the police. You run for your life.

You better do!

Rakesh Maria, joint police commissioner (crime), Mumbai City, says: "Possession of fake notes is an offence. One Rs 5 fake note is good enough [to be guilty of possession]." Well, now that you have a fake note in possession, you are already in trouble, technically! So what do you do now? Read on. . .

The legal tangle

With revenge on your mind, you determine to palm off the note to some unsuspecting fellow. In fact, if you think of palming off the note, you are not alone.

A quick dipstick survey shows 98 per cent people would do the same. But you better not do that, either.

Maria says, "It is unfortunate that people palm off fake notes. Palming off a fake note knowingly is also an offence."

You definitely do not want to be caught doing that. In fact, intentionally passing on a fake currency note is a cognisable offence, which could lead to a prison term.

Cursing your fate, you decide to get rid of the bummer right away, but how? A friend who inadvertently received a fake note donated it to a temple. (Another dipstick survey at a few local religious places shows that nearly 20 per cent of donations are in form of either soiled or fake notes.)

That's too low for you to do. Having run out of options, you march to a local bank, hoping to get an exchange.

The brutal truth

A Reserve Bank of India spokesperson says: "According to the RBI, when a customer takes a counterfeit note to a bank, the bank is supposed to impound it and give the customer an acknowledgement receipt."

After impounding the note, they will stamp it 'Counterfeit bank note impounded' and give you an acknowledgement receipt, even if you refuse to countersign the same. You lose your money since a fake note is never paid for but confiscated.

But that's not the end of the story.

The bank will file a First Information Report against your name at the local police station. A copy of this FIR is sent to the Forged Banknote Vigilance Cell at the bank's head office.

The bank will be alert if you try to deposit any fake notes in the future. The police will look into the matter and carry routine investigation in order to get any further leads and zero down on the exact source.

Says Maria: "Crime does not differentiate between class. Even if you are a housewife who inadvertently has a fake note, we can investigate. Once we know that there is no mens rea (criminal intent), we just make a diary entry."

Following the investigation, if you are found to be an inadvertent victim, the matter ends there.

But let's get real! Do you, even as a customer who honestly walked into a bank after being palmed off a fake note, want to face the police?

What if you are planning for studies abroad, or an employment visa? Wouldn't an FIR in your name have a negative influence on visa authorities? "No," says Maria. However, a source from British consulate says: ". . . on verification, things like this may give a wrong impression about you to visa authorities."

Are banks remiss?

Newspapers and news channels have been reporting about ATMs dispensing fake notes. Instances of bank staff diluting authentic currency with fakes have been reported, too.

Take the case of the chief cashier of a State Bank of India branch in Domariaganj, who was caught in the Rs 4 crore (Rs 40 million) fake currency scam. Such instances show that even banks can be a source of fake notes these days.

A cashier in a private bank says on the condition of anonymity: "We get customers who bring in fake notes, claiming that our ATM had dispensed it, but since they can't prove it, we are helpless to do anything about it."

Stories of banks brushing off responsibility, after dispensing fake notes via ATMs, is not uncommon.

The RBI has taken initiatives to deal with the dispensing of fake notes by ATMs. It has asked banks to set up note-sorting machines at all branches. In future, ATMs might be fitted with in-built detectors for fake currency notes.

The apex bank has proposed to introduce plastic notes, and it is common knowledge that improvisation in security features of the notes is an ongoing process.

Data from the RBI show that 398,111 counterfeit notes were detected during 2008-09 at the Reserve Bank's offices and branches alone. It goes without saying that there are many more in circulation and the number will only increase.

The best defence is to be vigilant while handling cash, especially with Rs 1,000 and Rs 500 notes. And of course, pray that you never receive a fake note again!