An illegal Bangladeshi immigrant, Saiful Islam, 18, was arrested from a Bentinck Street shop on Sunday afternoon.
Deputy commissioner of police (central) Zulfiquar Hasan said several thousand counterfeit Indian rupees were found in his bag.
Islam had gone to the shop to purchase spares for drilling machines. Police said the shopkeeper got suspicious on scrutinising the notes and telephoned the local thana. He detained Islam in his shop on the pretext of rustling up the balance.
Hare Street police arrived shortly and found that the currency was forged. They took him in custody, Hasan said.
Investigations revealed that Islam had crossed over illegally to India from the Benapol border, in North 24-Parganas. Islam told the cops he had arrived in the city from Nawabgunge, in Bangladesh, on Saturday.
Police sources said Islam claimed that touts on the border had exchanged his Bangladeshi notes with Indian rupees after he had entered the country.
I had no idea about Indian notes and so I did not realise the currency was fake, Islam said.
Hare Street police said Islam admitted this was his fourth trip to the city. He would enter the country after paying the border guards and touts in Benapol. We are verifying his statement, a Hare Street officer said.
According to deputy commissioner Hasan, Islam told the police he had come alone and does not know anybody in the city.
Police are also crosschecking whether Islam is a part of a gang of fake currency racketeers. State police had arrested five Bangladeshis last year, carry fake Indian currency to India from Bangladesh.