NEW DELHI (AFP) - Indian police have arrested a cash handler after notes in a state bank ATM were replaced with children's toy bills, an officer said Friday (Feb 24).

Mohammad Isha is accused of stealing the real cash and substituting it with fake bills earlier this month when he was refilling the State Bank of India machine in New Delhi.

"After entering the ATM with the cash bag, Isha removed the notes from the ATM tray and replaced them with the dummy cash," the officer told AFP on condition of anonymity.

"We interrogated him at length and he has confessed to the crime."

The dummy 2,000-rupee (S$42) bills were marked 'Children Bank of India' - and carried the misspelt pledge "I promise to pay the barer two thousand coupens".

Isha will face trial for cheating and theft.

The 2,000-rupee bill was introduced last year after Prime Minister Narendra Modi pulled all existing high-value notes from circulation in a bid to tackle large-scale tax evasion and counterfeiting.

The decision removed around 86 per cent of available cash at one stroke, triggering huge queues outside banks and ATMs.