Fake notes in ATMs: RBI plays down issue, says they are odd cases

RBI's deputy governor Rama Subramaniam Gandhi termed on Thursday the rare instances of fake currencies coming out of ATMs as "odd cases" that should not cause too much concern, but assured the Central Bank is willing to re-look at guidelines for outsourced cash management agencies. 

"How many cases of fake notes being dispensed by over 2 lakh odd ATMs? One should not blow it out of proportion. It should not cause too much concern...if any changes are needed in the third-party cash handling (who fill up the cash machines), we will do that," Gandhi told reporters in Mumbai. 

He also appealed to the public to develop a habit of periodically checking the notes for its genuinity. 

Over the past week, there have been reports of fake notes allegedly coming out of ICICI Bank and SBI cash vending machines. 

"Its not that all ATMs are dispensing fake notes, one odd case was noted. We cannot generalise," Gandhi said. 

Even though official data on growth has suggested that the economy has been resilient to demonetisation, Gandhi reiterated that there will be a "transitory" impact to the economy that was mentioned in the policy statement last month. 

He said the RBI had gone by the data only for two weeks while making the estimate on having a transitory impact. 

Meanwhile, when asked about instances of banks hiking cash handling charges, Gandhi said this is not a trend of banks hiking service charges as they have only been taken back to the pre-demonetisation levels, and assured intervention in case they become unreasonable. 

While delivering a speech at the Globallaw event, Gandhi also hit out against complex structures being used for tax avoidance purposes, calling it a challenge for regulators. 

"At times, the underlying motive could be to create opacity through a labyrinth of structures for reasons unjustified which evokes concerns among the regulators of the countries concerned," the deputy governor said. 

"Base erosion or profit shifting has often been used as a tax avoidance strategy by MNCs for shifting profits from high tax jurisdictions to low-tax jurisdictions," he said. 

Stating that current account deficit is a reality of a connected world in a high import country like ours, Gandhi said we need forex inflows to fund the gap. 

He, however, said the country remains an attractive destination for foreign direct investment due to the positive regulations here. 

"We have created a positive environment for fund flow to happen. Our macroeconomic policies are very strong. We hope investors take the right call and bring in investment," Gandhi told reporters. 

He said the RBI is working with government to have more debt recovery tribunals, which will help in the recovery processes and added that the introduction of the Bankruptcy Code will also help in bad asset resolution.