The State Bank of India said on Wednesday it is examining all currency notes at automated teller machines (ATMs) after media reports cited fake 2,000 rupee notes being dispensed by one of its ATMs in New Delhi.
SBI accounts for more than a fifth of India's banking assets.
The bank, in a statement, said it suspected foul play and investigations were underway.
A man who had gone to withdraw money at an ATM in Sangam Vihar in New Delhi allegedly ended up getting four notes of Rs 2,000 with "Children Bank Of India" written on them, police said on Wednesday.
Rohit Kumar, who works as a customer care executive at a call centre in Chhatarpur, had gone to withdraw cash from the SBI ATM on February 6.
He got four notes of Rs 2,000 which had "Churan label" written on them in place of the official watermark.
Police said all the notes were found as "children playing notes", which are available at toy shops.