CHAPTER IV

THE HISTORICAL PERSPECTIVE OF ATM

INTRODUCTION

An ATM allows a bank customer to conduct their banking

transactions from almost every other ATM machine in the world. DON

Wetzel was the co-patentee and chief conceptualist of the ATM. The

concept of the ATM first began in 1968, a working prototype came about

in 1969 and Docutel was issued a patent in 1973. The first working ATM

was installed in a New York based Chemical Bank.

The World's first ATM was installed in Enfield Town in the London

Borough of Enfield, London on June 27-1 967 by Barclays Banks. This

instance of the invention is credited to john Sheoherd-Barron although

George Simjian registered patents in New York, USA in the 1930.

The First Voucher Based cash dispensing machine was installed in

1967 by Barclay's Bank in London. And then the next version was going

to be the total teller created in 1971, which is the ATM we all know today.

ATM Networks

Most ATMs are connected to authorization of a transaction by the

card issuer or other authorizing institution via the communications

network. Networking technologies are playing a pivotal role in

`networking' our World.

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Among the networking technologies that are relevant today, ATM is

one of the most popular and pervasive as it seamlessly integrates LAN

and WAN networks.

Further, as it provides a single platform for Voice, video and data, it

facilitates convergence.

Hardware and Software

ATMs contain Secure Crypto processors, generally within an IBM

PC compatible host computer in a secure enclosure. The sedulity of the

machine relies mostly on the integrity of the secure crypto processor: the

host software often runs on a commodity operating system.

Alternate uses

Although ATMs were originally developed as cash dispensers, they

have evolved to include many other bank-related frictions:

o Paying routine bills, fees and taxes (utilities. phone bills, social

security, legal fees, taxes, etc.)

o Loading monetary value into pre-paid cards (cell phones, tolls,

multi-purpose stored value cards, etc.)

o Ticket purchase (train, concert, etc.)

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ATM Applications

There are many ATM applications are provided for customers besides

cash transactions. ATM machine today can also perform the following:

o Sell Gift Cards.

o Sell Wireless Minutes.

o Western Union Transfers.

o Sell prepaid Debit Cards.

o Bank Deposits.

o Cash Checking.

o Bill Payments.

ATM Accessing Points

o Hotels and Motels.

o Convenience Stores.

o Shopping Centers.

o Restaurants. Bars and Pubs.

o Banks.

o Commercial Areas.

o Residential localities.

o Major Petrol Pumps.

o Airports

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o Near Railway Stations, etc.

ATM Features

Cash withdrawal

Normally allowing up to Rs.25000/- per day from Customers

account (50,000/- for HNI's)

Balance Enquiry

Know our ledger balance and available balance.

Mini Statement

Get a printout of our last 8-10 transaction on our Current Account.

Deposit Cash/Cheque

Avails at all full function ATMs customer can deposit both cash and

cheques. Cash deposited in ATMs will be credited to the account on

the same day (providing cash in deposited before the clearing) and

cheques are sent for clearing on the next working day.

Fund Transfer

Transfers funds form one account to another linked account in the

same branch and in different bank account.

PIN Change

Change the Personal Identification Number of ATM.

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Payments

The latest feature of ATMs is used for payment of bills, making

donations to temples/ trusts, buying internet packs, airtime

recharges for prepaid mobile phones, and much more.

Others

Request for a cheque book from ATMs and our concerned branch

will dispatch in such that it reaches you within 10 working days.

ATM Services

1. Mobile Prepaid Card Recharge

Use your ATM Card at any of the Bank availing this service: we can

purchase mobile re-charge cards.

2. Internet Packs (ATN - Any Time Net)

We can purchase new internet connection or buy or renewal packs

by bank ATMs.

3. Donations (Anytime Blessing)

Offers Donations and ask for a Monorath / Rajbhog to be done.

4. Mutual Funds Transactions

Buy or Sell Mutual Funds through Various Bank ATMs.

5. Bill Payments

Pay your day-to-day bills through Banks ATMs and enjoy the

convenience of Banking.72

6. Flexi Top up

All Bank Debit / ATM Cardholders can now refill their prepaid phone

cards through their bank ATMs or through SMS. This facility is available

for all circles of the following operators:

a) Hutch/ Orange

b) Airtel

c) Idea.

7. Charity

Through this facility we can donate for charity against any of the

following heads:

a) Child Welfare.

b) Education.

c) Health & Sanitation.

d) Livelihoods & Poverty.

e) Service for the disabled.

8. Calling Cards

Calling cards enable a user to make a call either through the

normal phone or through the Internet protocol. There are two kinds of

cards available.

a) India on All Cards

b) Hello World Cards73

Benefits of ATM Cards

The Cardholder or the customer can access cash, make payments

at Merchant Establishments, ascertain information about his Account

Balance through the use of the Cards at ATMs devices (whether of the

Bank or Shared Network) for viewing Account information through

Corporate Interest Banking/for using Corporate Care Services or any

such services as specified by the Bank from time to time. The card is valid

for use at ATMs and Merchant Establishments in India and abroad.

However, the Card is not valid for payment in foreign exchange at

Merchant Establishments in India. The Card is valid up to the last working

day of the month indicated on the Card.

The advantage of almost universal acceptability of a debit card

comes with a subtle disadvantage of indulging in extravagance without

thought of prudence. The ATM card, while ensuring that you do not spend

beyond limits also comes with the inconvenience of hunting for an ATM

Center every time you need cash.

Consumer Benefits

All the convenience of a bank card for persons currently having no

banking relationships.

Accepted at gas stations, supermarkets, department stores,

restaurants and places of entertainment.

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Benefits of not carrying cash with the convenience associated with

bank account

Security of PIN.

Balance recovery by cardholder in case of lost card.

Convenience, easy to use and easier to carry than cash.

Immediate anytime access to account information.

Technological developments

India's first rural automated teller machine to serve remote areas of

the subcontinent.

It can process the worn notes in small denominations that are the

main currency in Indian villages, and at $800, or about 650, the machine

costs less than one-twentieth the price of a regular ATM.

India's ICICI Bank Ltd., with the help of the institute in Chennai

formerly Madras-and others, has developed the village ATM from

inexpensive homemade parts and programming. Despite its low price tag,

the machine is built to survive extreme weather and power outages. It can

tell when two ragged notes get stuck together and can scan fingerprints to

identify rural savers who are illiterate or are reluctant to use a personal-

identification number. The ATM will be tested at an ICICI branch in

Chennai, this month. If it works, the Wigged ATM eventually could be

used at hundreds of Interest Kiosks remote areas of India.

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India's First Bio-ATM from Axis

A Pune based technology company has developed Bio-ATM, a

biometric based automated teller machine for banks and financial

institutions which leverages sophisticated biometric technology to allow

secure ATM transactions. This is the first time that any Indian company

has developed such an ATM machine. The Bio ATM provides alternative

to the regular card and pin based ATM transaction systems. In order to

access accounts users need to give their biometric to the machine that

will verify and authenticate it with the biometric records available in the

database. The machine uses fingerprints for the verification purpose and

hence customers will need to register their fingerprint with the bank.

The trick, they say, is technology. In a country where most potential

savers make less than $100 a month, the banks have mastered ways of

attracting small customers, even when they hold accounts with a

minimum balance of $100. Setting up a national network of full-fledged

branches was too expensive, so the banks expanded using ATMs, phone

banking and the Interest to reach new customers inexpensively.

The challenge is that the transaction sizes are very small by

international standards, says Neeraj Swaroop, country head of retail

banking at HDFC in Bombay. We were able to do it in an economically

viable manner by investing in the right kind of technology.

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Thanks to affordable technologies, the most advanced banks in India

say more than 70% of transactions are done outside branches- They are

aggressively targeting the customer like never before," says Gurunath

Mudlapur head of research at Khandwala Securities in Bombay. "They are

using a lot of innovation for the Indian context."

HDFC Bank on the other hand, with around 200 ATM all over India

and offering a host of information through its Web presence

www.hdfcbank.com in among the forerunners in corporate banking.

Working on the concept of anytime, anywhere banking, distant banking on

HDFC enables one to make requests for stop payment, banker's cheque

and demand draft. Besides, the banks wide area network (WAN)

facilitates transfer of funds from one branch to another.

Banking functions dont stop there. C.S. Suresh, Manager, IT,

HDFC, says the bank also has opened salary accounts for corporate

customers at their respective offices. The 24x7, 365-day banking also

enables HDFC to take minimum turn around time for deliverables like

cheque book requests, fixed deposit request and ATM cards. Its ATM

facilities are a banking exercise in itself and offer services like cash

withdrawals, balance inquiry, PIN change, product information, deposits,

mini statements, cheque book/ statement requests, mail facility and funds

transfer.

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Today, banks are looking for solutions that can help them turn data

captured at every touch point like call center. ATM facilities, the Web

customer services and advertising into a knowledge base necessary to

provide customer behaviour, thereby providing them with opportunities for

cross-selling and determining the risk involved with respect to issues like

fraud, default and so forth. And this is where CRM implementation can

prove decisive, says Hosangady.

Next generation Consumer

Technology has become a symbol of status. This is not necessarily

a cultural attribute; it is also a function of generation.

SBI, ICICI, HDFC to share ATM network

In a two-way tie up with two leading private sector banks, State

Bank of India has forged one of the biggest alliances to share ATM

networks.

Following the signing of a memorandum of understanding the

customers of countrys largest commercial bank and ICICI Bank can

access each others ATM network for a small fee, an SBI release said in

Mumbai on Tuesday adding that its customers will also enjoy similar

benefits on a reciprocal basis with HDFC bank.

We are forming this alliance, which will herald its ahead of all such

partnerships with a shared ATM network of around 4,500 ATMs in the

country," a senior SBI official had said.

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SBI has its own network of 2,000 ATMs, which would be increased

to 3,000 by the end of the year, he added.

The signing ceremony for the ATM partnership took place at the SBI

headquarters in the presence of SBI Chairman A.K Purwar, HDFC

Chairman Deepak Parekh, HDFC Bank Chairman Jagdish Capoor and

ICICI Bank Managing Director and CEO K V Kamath.

ICICI Bank Executive Director Chanda Kochhar in a statement said

the ATM network sharing alliance reiterates the banks commitment

towards maximizing customer convenience.

ICICI Bank has seen sharp usage of ATMs and other electronic

channels in the recent past with 70 percent transactions routed through

these channels, the bank said.

ICICI Banks ATM network was pegged at over 2,725, while that of

HDFC Bank was in excess of 800.

The initiative by SBI with ICICI Bank and HDFC Bank conies in the

wake of other public and private sector banks forming ATM sharing

consortium.

Recently, Canara Bank, Central Bank of India, Indian Overseas

Bank; UCO Bank and Union Bank of India launched their co-branded ATM

network `Cash Online. There was also a consortium of banks under Cash

Tree, which includes Bank of India, Union Bank, Indian Bank and

Syndicate Bank.

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Table 4.1

Transaction Charges, Center and Withdrawing Limit

Bank NameCharges

(Rs.)Own ATMNetwork(Center)

Limit ofWithdrawing (Per

day)

ICICI 25 2727 25000HDFC 15 200 10000HSBC 15 435 5000SBI 50 3000 Subject to the daily

transaction limit

UTI 50 1850 30000

EMERGING ROLE OF AN ATM

NET BANKING

If you are tired to stand in a long queue waiting for a passbook to

be updated or wait for the next day for a demand draft to be prepared,

take hearts. Internet technology has invaded the portals of our banking

institutions and as the cliche goes everything will just be a click away. No

doubt- innovations like tele-banking and automated teller machines

(ATMs) have considerably put customers at ease in the recent past.

This development has been acknowledged by the latest Online

Banking Report, which features listing for ICICI Bank. Some others like

Citibank, HDFC Bank reality before this century closes.

One can intimate about the loss of an ATM card over the net when

using Infinity. Moreover, corporate can issue of letters of credit and make80

enquiry's regarding bills sent for collection via this service. A special

feature on Infinity is the facility for nicknaming all accounts to avoid.

Remembering lengthy account numbers, In terms of safety, HDFC

Bank allows one to have three login attempts after which a new password is

given while ICICI Bank will disable the password after five login attempts.

Latest Entrant

There are others who also have the facility like Global Trust Bank,

which is the latest entrant in the bandwagon. Others like ABN Amro and

Times Bank are also set to hit the net by next year.

Personal Banking Segment

The Bank continued its thrust on personal banking. Relationship

banking; International Photo Cum Signature ATM cards with higher cash

withdrawal limits are the main features of SBI Vishesh Scheme whereas

Core Power facilities inter branch banking transactions within core

banking branches

Core Banking Solutions (CBS)

Implementation of CBS would substantially enhance the Banks

capability in introduction of new and innovative products at very short

intervals across branches and other Value Added Services to customers

on a 24X7 basis, tone up internal efficiency through straight-through

transaction processing capabilities on a centralized database and improve

operational effectiveness in the areas, such as integration of multiple81

delivery channels, single window for meeting all needs of a customer,

better MIS and improved Security. This will take the Bank to a superior

technology platform leading to near-zero branch level system

administration.

Value Added Services

"College/Hostel Fee Payment' through ATMs-Covered more than 67

institutions.

Topping up of Mobile Phones of Idea, Orange and Airtel

transactions.

ATM is increasingly used as cash point.

Issue of monthly/quarterly season tickets for suburban trains of

Central Railway at CST Mumbai.

Cash as well as Cheque Deposit on ATM - Facility has been made

Operational on a pilot basis.

Temple trust Donation facility now available for Vaishnodevi, Sim

Sal Sansthan, Shirdi and Gurudwara Sahib, Nanded Devotees can

now offer their donation to these Temples through ATM.

Online collection of Application fees for GATE & JMET 2006. MTNL,

Mumbai Bill payment through ATM.

No Fuel Surcharge Programme at BPCL Petrol Pumps.

A promotional Campaign for ATM card usage has been launched in

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association with MCL and BPCL. Customers using ATM card at select

outlets of BPC will not have to pay surcharge of 2.5% on these

transactions. The campaign is on in 10 cities since August 2006.

Saving safe at the ATM

Keep your PIN a secret.

Keep it in your head, do not writ; it down.

If you think your PIN might be known to any one else, the very best

thing that you can do is cancel your card or change you PIN.

If you feel unsafe at an ATM or you are suspicious of individuals

loitering around, go away and come back later.

Follow the instructions on the ATM screen only put in your PIN

when the ATM tells you to do so.

Stand close to the ATM and block the view with your hand.

Never write your PIN on your card. This is like handling all your

money to a stranger on the street.

Always check it is your card you get back from the ATM.

Never give out your PIN to another person or let them stand near

you when you key it in. Sometimes someone might say he or she is

a bank official and will help you. No bank employee will ever ask

you for your PIN, or stand too close. If anyone does be instantly

suspicious, cancel the transaction and move away.

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Do no count your cash in front of the ATM.

Avoid using ATMs in secluded areas after dark.

Possible Remedy

There are many types of card frauds like the application fraud;

counterfeiting, impersonation during account takeover, cu d stealing and

other forms' The remedies include algorithm testing, propel

documentation, effective primary investigations, police investigations, etc

Also an effective legal framework and trained law enforcement agencies

could act as deterrents

The Future Outlook

Banks everywhere are using technology not merely as a frill but as a

dire necessity. Technology has become a key business enabler in six

critical areas of banking namely augmenting profits, operational efficiency,

customer management, product innovation, distribution and reach- and

lastly efficient payment and settlement system.

ATM Security Tips

Because of the variety of ATMs, the unique characteristics of each

installation, and crime considerations at each location, no single formula

can guarantee the security of ATM customers. Therefore it is necessary

for ATM customers to consider the environment around each ATM and

various procedures for remaining safe when using an ATM.

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Criminals select their victims and targets, focusing on the unaware

or unprepared. Criminals are also drawn to environmental conditions that

enhance the opportunity to successfully complete their crime. The attitude

and demeanor you convey can have a tremendous effect on potential

assailants. There are a number of things you can do to increase you

personal security and reduce you risk of becoming an ATM crime victim.

The following crime prevention tips can help the use of ATM's sager

for everyone:

Walk purposefully and with confidence. Give the appearance that

you are totally aware of your surroundings.

Be aware of your total environment and what is going on around

you. Criminals tend to avoid people who have this type of

demeanor.

Perform mental exercises and thing out what you would do in

different crime or personal security situations.

Follow your instincts. If you feel you are in danger, respond

immediately. Remember that your personal safety is the first

priority.

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MODE OF UTILIZATION

ATM Selection Considerations

The law set minimum standards for ATM lighting, procedures for

evaluating the safety of ATMs and requires notices to ATM users outlining

basic safety precautions for using ATMs. Although ATM environmental

design issues are covered in the law, there are other considerations that

an ATM customer needs to consider prior to selecting and using an ATM.

Do not select an ATM at the corner of a building Corners create a

area in close proximity to the customer's transaction. Select an ATM

located near the center of a building. An ATM farther from the

corner reduces the element of surprise by an assailant and

increases effective reaction time by the user.

Identify an ATM with maximum natural surveillance and visibility

from the surrounding area. This will create a perceived notion of

detection by a criminal and increases the potential for witnesses.

Select an ATM at a location void of barriers blocking the line of sight

of the ATM. This includes shrubbery, landscaping, signs and

decorative partitions or dividers. Barriers provide hiding areas for

would be assailants.

Select an ATM that is in a well-lighted location.

Whenever possible, select an ATM that is monitored or patrolled by

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a security officer.

Select an ATM with a wide-angle transaction camera and/or a

continuous transaction surveillance camera. Consult the bank or

location management for the ATM site and surrounding

neighbourhood.

Avoid ATM locations with large perimeter parking lots and

numerous ingress and egress points.

RELIABILITY

ATMs are generally reliable, but if thy do go wrong customers will

be left without cash until the following morning or whenever they can get

to the bank during opening hours. Of course, not all errors are to the

detriment of customers. there have been cases of machines giving out

money without debiting the account, or giving out higher value notes as a

result of incorrect denomination of banknote being loaded in the money

cassettes. Errors that can occur may be mechanical (such as card

transport mechanisms; keypads; hard disk failures); software (such as

operating system; device driver; application), communications; or purely

down to operator error.

SECURITY

Early ATM security focused on making the ATMs invulnerable to

physical attack. They were effectively safes with dispenser mechanisms.

A number of attacks on ATMs resulted, with thieves attempting to steal

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entire ATMs by ram raiding.

Modern ATM physical security concentrates on denying the use of

the money inside the machine to a thief, by means of techniques such as

dye markers and smoke canisters. This change in emphasis has meant

that ATMs are now frequently found free-standing in places like shops,

rather than mounted into walls.

Another trend in ATM security leverages the existing security of a

retail establishment. In this scenario, the fortified cash dispenser is

replaced with nothing more than a paper-tape printer. The customer

requests a withdrawal from the machine, which dispenses no money, but

merely prints a receipt. The customer then takes this receipt to a nearby

sales clerk, who then exchanges it for cash from the till.

There have also been a number of incidents of fraud where

criminals have used fake machines or have attached fake keypads or

card readers to existing machines. These have then been used to record

customer's PINs and bank account details in order to gain unauthorized

accessed to their accounts.

A bank is always liable when a customer's money is stolen from an

ATM, but there have been complaints that banks have made it difficult to

recover money lost in this way. In some cases, bank fraud occurs at ATMs

whereby the bank accidentally stocks the ATM with dispensed. Individuals

who unknowingly use such ATMs are probably never tried, but those who

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withdraw a second time are usually prosecuted.

Fraud Considerations

Memorize your Personal Identification Number (PIN). Do not write it

down or keep it in your wallet or- purse. Do not tell anyone else

your PIN ANYONE (including bank employees, the police, etc.)

Shield the ATM keypad from anyone who may be standing or

parked nearby or anyone crowding you in an attempt to view you

PIN and/or transaction. Use your body as a shield if necessary

while you enter your access code.

Make sure you retain your transaction receipt. Do not throw the

receipt away at the ATM site.

The National Consumers League has opened a toll-free number to

provide information on ATM frauds and scans. The National Fraud

Information Centre at 1-800-876-7060 employs counselors who will

refer consumers to the proper agency for reporting a fraud or scam.

Immediately report any stolen or lost ATM Card to the proper

entities.

As far as your security is concerned; you can never be too careful,

too prepared or too aware. Share this information with family and

friends. Schedule family discussions and practice regularly to

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ensure that everyone you know is safe and informed.

ATMs in India

There are number of Bank ATMs are functioning in India, this study

covers ICICI, HDFC, SBI, UTI and few other banks ATMs.

ATMs are equipped with all the state of the art services required by

an ATM user. The general publics can obtain the services of various

banks and other financial institutions from an ATM by getting an ATM

Card. ATM Card members can enjoy financial services like withdrawals;

deposits, transfer, inquiries etc. from an ATM on a daily basis.

Due to competition, many financial institutions in India proved

various discounts and some don't' even charge for their ATM services.

Moreover networking between various banks facilitates an ATM user to

actually use an ATM anywhere and at anytime.

ATMs are very convenient. Daily withdrawals, deposits, transfers

and other services can be done in seconds without wasting any time.

Cheques don't need to be used to withdraw money and time will not be

wasted standing in queue for hours at the bank.

ATMs are known throughout the world for their 24 hour quick

services. ATMs are now becoming a need in everyone's life. Being

accessible even at odd hours, it is the popular choice of many people

wanting instant access to their bank accounts. Various banks offer

different facilities are services. Hence, one should choose between the

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alternatives provided by various ATM service providers.

ATMs provide different service options as well as various measures

for security. Computer viruses may infect ATM machines. These viruses,

which sometimes get installed by computer hackers are continuously

filtered in the ATMs in India using various security measures such as

keeping patches up to date and installing all new ATMs with firewall

software.

Customers should be aware of the safety measures they can take

while using an ATM in local places where there arent security cameras;

the number of ATM frauds seems to be rising. Various steps to prohibit

such frauds have been taken, but without making the citizens more

vigilant, it is impossible to completely eradicate ATM fraud.

Some of the banks permit customers to interact with them and

transaction electronically with them. Such services include request for

opening of accounts; requisition for cheque books, stop payment of

Cheques, viewing and printing statements of accounts, movement of

funds between accounts within the same bank, querying on status of

requests, instructions for opening of Letters of Credit and Bank

Guarantees etc. These services are being initiated by banks like ICICI

Bank Ltd., HDFC Bank Ltd., Citibank, Global Trust Bank Ltd., UTI Bank

Ltd., Bank of Madura Ltd., Federal Bank Ltd., etc. Recent entrants in

Internet Banking are Allahabad bank (for its corporate customers through

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its All Net service) and bank of Punjab Ltd. State Bank of India has

announced that it will be providing such services soon. Certain banks like

ICICI Bank Ltd., have gone a step further within the transactional stage of

Internet Banking by allowing transfer of funds by an account holder to any

other account holder to any other account holder of the bank.

As consumer adoption of some of these technologies makes there

ubiquitous; bankers and technologists are in a position to extend the

infrastructure that supports the self-service channel. New opportunities to

extend the reach of ATMs become available.

Some of the fastest-growing areas for ATM deployment are in

emerging such as China and India. Countries such as these any not

benefit from a robust fixed-line infrastructure, especially in rural areas.

For more than 300 years, banking was a simple branch operation.

However the introduction of the ATM in 1967 and the introduction of

online teller terminal systems have completely changed customer

expectations the ATM displacing the cashier/teller.

Technology, Payment and Settlement System

The information technology revolution has brought about a

fundamental transformation ushering in, as Alvin Toffler describes it, the

fourth wave. Perhaps no other sector has been affected by advances in

technology as much as banking and finance. It has become the most

important factor for dealing with the intensifying competition and the rapid

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proliferation of financial innovations. It has enabled, in general, raising the

efficiency of financial intermediation in the face of ever-rising volumes of

transactions, falling margins and more empowered customer

expectations. In particular, there are four or five key areas in which the

financial system has experienced the benefits of the technology

revolution: product development- market infrastructure, risk control nod

market reach. The interaction of technology with globalization has

contributed to the expansion of financial markets beyond national borders,

heralding the end of geography. In the process, technology has changed

the contours of three major functions of financial intermediaries: access to

liquidity, transformation of assets and monitoring of risks.

The Indian financial system is quickly adapting itself to these

developments and is acquiring a customer-centric focus. The proliferation

of Automated Teller Machines (ATMs), networking of these ATMs and

Shared Payment Network based ATMs is a feature that has been

welcomed by the banking public. Other innovations already within the

domain of banks and financial systems in India include Internet Banking,

Electronic Funds Transfer and Anywhere/ Anytime Banking, all of which

have a high level of technology embedded in the systems offering these

services. Many of the older banks are migrating towards the

implementation of Core Banking or Clustered Solutions which would

contribute significantly towards increasing customer satisfaction. In all

this, business process re-engineering becomes an essential concomitant

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to ensure best results in technology up gradation.

In recent years, the Reserve Bank has assigned priority to the up

gradation of technological infrastructure in the Indian financial system.

Efforts have been made to modernize clearing and payment through

MICR based cheque clearing, Electronic Clearing Services and Funds

Transfer (ECS and EFT) and the Centralized Funds Management

System.

Adequate security is a prerequisite for a modern, technology-

intensive payment and settlement system, especially one functioning in a

highly networked environment.

The future of banking and finance hinges around exploiting the

opportunities thrown up by the technology explosion. This requires the

combined efforts of all participants in the financial system. In December

2005 the Reserve Bank set out its vision of the road ahead in the

document Payments System in India to share this vision with all

participants and the nature and direction of reforms needed to achieve it.

The collective goal should be to take use of synergies between

technology and finance to maximize the benefits to society.

COMPLAINTS

Changes in the Usage

With IT becoming an integral part, has banking really changed"94

Most customers feel IT has made a vast difference in the way banks are

conducting business. However- there are many who have been left high

and dry by the bank's use of technology

1. Suresh, and HDFC account holder, complains that ATMs are not

all that efficient. "Most of the time we face some problem or the other with

these machines. I think it is because of lack of maintenance".

2. Another customer, P.V.Ramana Rao, complains, "At one branch

of Andhra Bank the network failed and they were unable to check the

balance in any account. This forced them to stop functioning and

everyone had to wait till the next day to transaction business",

3. Seshadrinathan of SSI makes a point, `Despite public sector

banks having woken up to competition posed by foreign and private

banks and recognized the need to adopt IT, a cautious approach, lack of

resoluteness and a clear strategy to translate intent into practice are

acting as the biggest handicap. A classic case of the spirit is willing but

the flesh is weak.

SBI, however, is now leaving all these factors behind the attempting

to provide anytime, anywhere cash to its customers by taking up the

installation of ATMs aggressively. Following the governments approval,

SBI has also computerized 40000 PPF accounts using Bandmaster,

software developed by Spanish company Kindle and later improvised in-

house. It is also in the process of switching to 500 MHz severs from its

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current 200 MHz EoD (end of the day) transactions-conducted after public

hours and checked at the end of the day-could be better managed with

faster processing power Contends the bank official. The bank also has

introduced net banking, albeit on a very small scale. Those subscribing to

the facility have the advantage of checking their balance amount, issuing

instructions for drafts and getting information on loans.

Customers also complained about the non-availability of envelopes

to stuff cash at ATMs. While the ATM usage is on the rise, customers

have some problems in using these machines. Waiting in long queues at

ATMs remains a bugbear. This indicates the need to install additional

machines at high-demand areas.

The limit on daily cash withdrawal is another major problem that

ATM users often complain about. Perhaps the lack of wide acceptance of

debit cards at many shops and outlets makes people to resort to cash

withdrawal for their needs, the survey said. About 95% of the respondents

preferred banking through ATMs to conventional branch banking. Over

two-thirds of persons used ATMs more than once in fifteen days. People

are now less hesitant towards the use of ATMs for usual services.

RISK OF NEW TECHNOLOGY

Technology and Frauds

With banks deciding on setting up networks and computerizing the

whole banking process, and providing services through multiple channels,

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they face many risks. Mail spoofing (e-mail forgery), web spoofing

(Website forgery), attacking the user computer, attacking the banks

server, media tapping, services denial etc., are some of them.

All frauds generally happen due to impersonation, sniffing

information and hacking. The impersonation can be for an individual, a

website a computer, a router etc. Frauds of this nature may be prevented

by adopting public key infrastructure (PKI). Other frauds may be

minimized through firewalls and intrusion detection system (IDS).

Cyber money laundering aims to conceal the origin of illicit or illegal

money. By laundering the money, the criminals are trying to close their

track. Money laundering is normally accomplished by using a three-stage

process, namely placement, layering and integration. The banks are the

most important intermediaries in the money laundering chain.

This illegal activity could de-stabilize economies and result in lack

of public trust in the banking system. To fight this evil, there is evidently a

need for collective action by all the nations. It needs to be tackled at

organizational, national and international level. Many banks in the world

now adopt what are called 'know-your-customer' principles, which

essentially require the banks to exhaustively check the bonafides of the

customers, especially before entertaining high value transactions.

ATM crimes and frauds are rising throughout the world. Some of the

popular techniques employed to carry out these crimes are,

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Card Jamming: The card reader is tampered with, in order to

trap a customer's card. Later on, the criminal removes the card.

Card Skimming: It is the illegal way of stealing the card's

security information from the card's magnetic stripe.

Card Swapping: Through this method, the customer's card is

swapped for another card, without the knowledge of the

cardholder.

Website Spoofing: A new fictitious site is made, which looks

authentic to the user and customers are asked to give their card

number, PIN and other information, which are used to reproduce

the card for use as an ATM.

Physical Attack. ATM machines are physically attacked for

removing the cash. The Global ATM Security Alliance (GASA j',

which was formed in June 2003, has issued certain guidelines to

the customers to prevent the ATM frauds.

In India, where the total number of ATMs is not very significant- the

ATM related frauds are very few, as of now.

Fraud Victim Advice/Assistance for Consumer/Scares and

Investment Frauds

Ethical views reflect beliefs about right and wrong and define broad

standards of behaviour, which help shape, the rules we use to live

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together in society. Fairness and freedom are two ethical views that are

violated by fraud in an environment of dishonesty. Greed and laziness,

fraud deceives a person by unfairly misrepresenting truth. It also restricts

the freedom of its victims as it robs them of their money.

Financial Effect of Fraud

Of successful fraud attempts, respondents to a study conducted by

the National Institute of Justice indicated that of those respondents who

fell prey to a fraud scheme, 85% lost money or property; 20% suffered

financial or personal credit problems; 14% suffered health or emotional

problems directly related to their victimization and 14% of fraud victims

lost time from work.

Younger people who are ripped off by swindlers are fortune to the

extent that they have the opportunity to pick themselves up and restore

some or all of their loses through new earnings. If you are elderly,

disabled, or on a fixed income and you lack opportunities to recover your

losses you may face additional trauma. In some instances, an elderly or

disabled victim's very independence is jeopardized, particularly if family

members react to the loss by having the victim declared incompetent to

handle his or her own financial affairs.

Psychological Effect of Fraud

Fraud crime is a personal violation. Although there is no serious

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physical injury many victims of common men speak of the betrayal as the

psychological equivalent of rape. Some victims find it helpful to seek the

services of a counseling professional, clergy member, or advocacy

organization, but most suffer alone.

Your trust in your own judgement, and youre trust in others, is often

shattered. You may have hesitated to tell family members, friends, or

colleagues about your victimization for fear of criticism. Family and

business associates may even have been financially exploited at your

urging, resulting in increased feelings of guilt and blame.

RECENT TRENDS OF ATM USAGE IN INDIA

ATM networks and their expansion has been one of the areas in

financial services that have received maximum attention in the

recent past. So far this has been viewed as a numbers game,

with both SBI and ICICI putting up over 1000 installations each.

SBI ATM network includes 5479 ATMs in India, which is the

largest ATM network in the country. The bank continues to

expand this network rapidly. Customers can transact free of cost

at the ATMs of their Bank. The agreement with VISA and Master

Card International for acquitting ATM transactions has resulted

in another revenue generation stream.

There is a trend for public information to be based o Web

technologies and there is also a trend for ATMs to provide more

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than just cash to the user. These two trends are likely, in time, to

result in internet-based machines which can offer a range of

financial services, and which will be more easily adapted to the

specific preferences of the user.

At present in India vast majority of ATMs are owned or leased by

banks and financial institutions. Trends overseas and

progressively in India are leading to more low-cost limited

function ATMs being installed by shopping centres, clubs, public

sporting venues and the like.

An ATM has an impact on accessibility and consistence of user

interface. Growing use of ATMs for advertising and promotion of

goods and services. Using ATMs for advertising is the key theme

of this years ATMs industry.

NEW INITIATIVES

1. Mobile ATMs

Access your bank accounts through mobile ATMs. Banks now

provides Standard ATM facilities through ATM vans.

2. Bulk Deposits

Now we can deposit any amount of money through Bank Bulk

Deposit ATMs giving us the convenience of depositing huge amount at

one time.

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3. ATM for visually challenged

Various Banks has launched ATMs with special voice guided

systems which guides a visually challenged person to access out ATMs

without any help.

4. Full Fledged Statement Printer

Now we can print Detailed Account Statements anytime through

Full Fledged Statements Printers, which may available only in few banks

ATMs.

5. Insurance Benefits

The Cardholder may, under the Card- be offered various insurance

benefits from time to time by the Bank through a tie-up with an insurance

company, the Cardholder specifically acknowledges that they shall not

held the Bank responsible for and matter arising out of or in conjunction

with such insurance cover, whether for or in respect of any deficiency or

defect in insurance cover, recovery or payment of compensation,

processing or settlement of claims otherwise howsoever- and all such

matters shall be addressed to and sorted out directly with the insurance

company. The insurance company will be solely liable for settlement of

the claim. Further, the Cardholder also agrees that the Bank may at any

time (in its sole discretion and without giving any notice thereof to the

Cardholder or assigns g any reason thereof) suspend, withdraw or cancel

the benefit of such insurance cover, and there will be no binding obligation

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on the Bank to continue this benefit.

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