New Delhi: Two freshly minted Rs2,000 notes have been recovered from militants who were gunned down on Tuesday by the Indian Army in Jammu and Kashmir’s Bandipora district.

“Two terrorists have been neutralised in Bandipora area of Jammu and Kashmir and the things recovered from them have been handed over to police for further investigation. A cache of arms and ammunition were recovered, in addition to Rs15,000 in cash — two Rs2,000 notes and the remaining in Rs100 notes,” senior army officer Vikramjeet Singh told media.

It is, however, unclear how the militants procured the new currency notes, less than two weeks after they were introduced. Investigations are underway.

According to sources in J & K police, the notes could have been sourced locally.

The militants were killed in a gunfight with the Army that went on for several hours. Both militants are suspected to be from Pakistan-based terror outfit Lashkar-e-Taiba.

“Following specific information about militant presence in Bonikhan village, troops of the 13 Rashtriya Rifles and the Special Operations Group (SOG) of the state police launched the operation. As the surrounding troops closed in on the hiding militants, they opened fire triggering the encounter. The militants were engaged in a sustained gunfight till two of them were killed,” a senior police officer informed Gulf News.

The recovery of the new currency from militants is likely to provide fresh ammunition to the Opposition parties, which have been targeting Prime Minister Narendra Modi over demonetisation.

Tuesday’s incident came a day after four masked men burst into a bank in Malpora in Kashmir and decamped with Rs1.3 million in cash, mostly in demonetised Rs500 and 1,000 currency notes.

Earlier, three masked men had robbed a bank of Rs225,000 in Kulgam last month.

The heist comes at a time when terror financiers have been hit hard by demonetisation. Intelligence agencies are working overtime to gauge the effect of demonetisation on terror financing, particularly in the sensitive state of Jammu and Kashmir.