Indian is a developing country, Production and printing of Fake notes of Rs.100, 500 and 1000 were already there but after the demonetization the couterfiet notes of new Rs.50,200,500,2000 have also came to the light in very short time and which effects the country’s economic growth. From last few years due to technological advancement in color printing, duplicating, and scanning, counterfeiting problems are coming into picture. In this article, recognition and verification of paper currency with the help of digital image processing techniques is described. The characteristics extraction is performed on the image of the currency and it is compared with the characteristics of the genuine currency. The currency will be recognized and verified by using image processing techniques. The approach consists of a number of components including image processing, edge detection, image segmentation and characteristic extraction and comparing images. The desired results will be the text and voice output of the currency recognized and verified.