The 56-year-old remains in custody at Tamworth Police Station, charged with two offences.

Police will allege he was in possession of $850 in counterfeit notes when he was stopped and searched near Robert Street on Monday morning.

The IGA Supermarket raised the alarm with police after a man allegedly tried to use a counterfeit $50 note, just before 10am.

Officers arrived and zeroed in on the man nearby.

He's facing charges of uttering counterfeit money knowing it to be counterfeit, and possessing counterfeit money.

If found guilty, he faces a maximum penalty of 12 years' imprisonment.

The man was denied bail by police and will spend the night in custody ahead of a bail hearing in Tamworth Local Court on Tuesday.

Oxley police have repeated a warning for businesses to check all $50 notes that have passed through tills in recent days.

A TAMWORTH man has been arrested on Monday morning after reports fraudulent bank notes were being used at local businesses in the city.

Oxley police were alerted to reports of counterfeit $50 notes being used at businesses, particularly in West Tamworth on the weekend.

Businesses raised the alarm with police and the Oxley Proactive Crime Team (PCT) have been investigating.

Officers homed in on a man in Tamworth on Monday morning.

The 56-year-old man was arrested and taken to Tamworth Police Station for questioning.

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Oxley Detective Inspector Jason Darcy told the Leader the suspicious $50 notes appear to have foreign writing on them.

"Police were notified of several suspicious $50 notes that were passed at businesses in Tamworth over the weekend," he said.

"Following investigations, police have seized a significant number of notes on Monday morning and arrested a 56-year-old male.

"He is currently assisting police with their inquiries at Tamworth Police Station."

The man has not been charged but remains in custody.

Police believe more of the counterfeit notes could be in circulation in Tamworth.

Detective Darcy made an appeal for businesses and employees to be vigilant, and keep a look out for any suspicious notes being handed over, when accepting or handling cash.

"We would urge Tamworth businesses to look carefully at the bank notes being handed over and contact police if they notice anything suspicious about the notes," he said.

"Anyone who believes they might have a suspicious note is urged to contact Tamworth police on 6768 2999."

Investigations continue.

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