A report from the Intelligence Branch (IB) has revealed that ISI-backed agents allegedly put out fake currency notes of Rs 500 and Rs 1,000 denominations, worth Rs 30 lakh, in the city over the past three months.

The report follows Saturday?s seizure of forged currency notes worth Rs 7 lakh from a city hotel. Four people were arrested.

?Four months ago, we had found out that the total value of fake currency notes circulated in the city markets was Rs 50 lakh. The figure has soared to Rs 80 lakh in the past three months,? said an IB official on Sunday.

City police are, however, yet to make any headway regarding Saturday?s seizure of currency notes even after a warning message from Research and Analysis Wing (RAW) and IB.

RAW had submitted a report to the police describing how the city has become a vital link in an ?ISI-engineered? fake currency racket.

The agency had warned that the city markets could be flooded with countless counterfeit notes.

?The report mentioned how Dhaka is being used as the ?operation-base? by ISI agents. A copy of the report was also sent to the Special Branch (SB) office,? said an officer of the city police.

According to officers investigating the racket, the quality of the counterfeit notes are improving every day.

?It is difficult for a layman to differentiate between original notes and fake notes, which are generally printed in Pakistan,? said another police officer.

A senior IB officer said: ?The ISI directly engages agents in several places in Bangladesh. Sometimes, the agents fly to Karachi and Lahore. They return to Dhaka with a consignment of fake notes. The agents then enter India through the land border.?

He added: ?The agents enter the state through the borders of North 24-Parganas, Nadia and Murshidabad or along the river route in South 24-Parganas.?

After reaching the state, the agents head for Calcutta, from where the notes are distributed to the markets and to other parts of the country.

City police have sounded an alert in all districts along the India-Bangladesh border.

?The district administrations have been asked to issue special instructions to police stations close to the border, while the SB has been asked to collect information about those working for the Bangladeshi agents in Calcutta,? said a city police officer.