Two militants were killed in the Bandipora district of Jammu and Kashmir on Tuesday morning. The new Rs 2,000 currency notes, arms and ammunition were found from the militants.
The encounter had begun between the security forces and terrorists on Tuesday morning after gunshots were heard in the area.
On Monday, BSF head constable Rai Singh was killed after being injured in cross-border firing in the Rajouri sector along the Line of Control in Jammu.
Further details are awaited.