"Tunda has received several consignments of fake Indian currency arranged by an ISI brigadier, but he doesn't know his name," said a police officer.
Tunda, who was arrested Aug 16 from the India-Nepal border, claimed that he didn't know the name of the brigadier because he was not in direct touch with him, said investigators.
"A man named Iqbal Kana worked as a conduit between Tunda and the ISI brigadier. The brigadier would give fake currency to Kana who delivered it to Tunda to circulate it in India through his network," said the officer.
According to the officer, Tunda used to get the counterfeit Indian currency in separate consignments of Rs.1-2 crore. Tunda told interrogators that the counterfeit notes were printed in Islamabad and Peshawar in Pakistan.
Police said Kana, wanted in a case related to running a fake currency racket in India, was using Tunda's network for circulating the counterfeit.
"Tunda himself came to India or several occasions and used his men to deliver the fake currency consignments in various parts of the country," said the officer.
Kana is suspected to haved his base in Pakistan.
"Kana's name first surfaced when a team of police recovered fake notes with a face value of Rs.2 crore from south Delhi in 2012. Few more persons, including Tunda, were found to be involved in the same case," the officer added.
Tunda, whose police custody was extended for four more days Tuesday, told investigators that he got commission from the ISI for delivering the consignments in India. But the amount of commission were always altered.
Police said Tunda and Kana together were also involve in extortions in Pakistan's Lahore city.
"They extorted money from Pakistani traders by posing as ISI officials. However, their extortion racket was busted by the ISI and they were nabbed. Later, the ISI let them go after a warning," the officer said.
Tunda was arrested Friday in Uttarakhand's Banbasa area close to the Nepal border when he was trying to enter India.