INSTITUTE OF MANAGMENT STUDIES, DAVV, INDORE

FINANCE AND ADMINISTRATION – SEMESTER IV

CREDIT MANAGEMENT AND RETAIL BANKING

Technology Products

 Growth of technology has changed banking payment system world over – from cash (notes
and coins) to cheques and transfer and now use of electronic devices like ATM, plastic card
etc. providing facility to customers round the clock.

AUTOMATED TELLER MACHINE (ATM)

 Performing activities like withdrawal or deposit or cash/ cheque

 Committee headed by C Rangrajan recommended for setting up of ATM
 They are located at convenient places like airports, railway station, hospital, commercial
centres.
 Convenience to customer – 24 X 7 availability, less transaction time, any branch/
anywhere banking, other services also.
 Convenience to banks – cost of setting is lower than setting up of a branch, cross selling,
less hassle in handling cash, publicity by display of products on screen.
 Types of models – Online, offline, stand alone, networked.
 Networking of ATM – In order to facilitate inter operability among clusters at the national
level, the IDRBT has initiated process of setting up a National Financial Switch. IBA was
first to set up Shared Payment Networking System (SPNS) or SWADHAN network of ATMs
for its members in Mumbai.
 Components of ATM for customer interface – Video Display monitor, Keyboard/ Keypad,
Touch screen, slots for card reader, cash dispenser, envelop dispenser and deposit slot.

What is an Automated Teller Machine (ATM)

 An ATM is a computerized machine that provides the customers of banks the facility of
accessing their account for dispensing cash and to carry out other financial & non-financial
transactions without the need to visit a bank branch.

What are White Label ATMs (WLAs)?

 ATMs set up, owned and operated by non-banks are called WLAs. Non-bank ATM
operators are authorized under the Payment & Settlement Systems Act, 2007 by the
Reserve Bank of India (RBI).
 Except acceptance of cash deposit and few value added services which are not available at
WLA all other operations are similar to ATM.
 The rationale of allowing non-bank entity to set up White Label ATMs has been to increase
the geographical spread of ATM for increased / enhanced customer service.

What are the services / facilities available at ATMs / WLAs?

In addition to cash dispensing, ATMs may offer many other services / facilities to customers. Some
of these services include:

 Account Information
 Cash Deposit
 Regular Bills Payment
 Purchase of Re-load Vouchers for Mobiles
 Mini / Short Statement Generation
 PIN change
 Request for Cheque Book

What is Personal Identification Number (PIN)?

 PIN is the numeric password which is separately mailed / handed over to the customer by
the bank while issuing the card. Most banks require the customers to change the PIN on
the first use. Customer should not disclose PIN to anybody, including to bank officials.
Customers
 The cards issued by one bank in India may be used at any other ATM / WLA in the country.
 A transaction carried out at an ATM of the card issuing bank is called as On-Us transaction.
A transaction carried at an ATM of the bank which is different from the card issuing bank or
a transaction at a WLA is called an Off-Us transaction.
 Customers are allowed some free transactions at ATM. With effect from November 01,
2014, a bank must offer to its savings bank account holders a minimum number of free
transactions at ATMs as under:

 Transactions at a bank’s own ATMs (On-Us transactions) at any location:  Banks must offer
their savings bank account holders a minimum of five free transactions (including both financial
and non-financial) in a month, irrespective of the location of ATMs.
 Transactions at any other banks’ ATMs (Off-Us transactions) at Metro locations:  In case of
ATMs located in six metro locations, viz. Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and
Hyderabad, banks must offer their savings bank account holders a minimum of three free
transactions (including both financial and non-financial transactions) in a month.
 Transactions at any other banks’ ATMs (Off-Us transactions) at Non-Metro locations:  At any
location, other than the six metro locations as above, banks must offer the savings bank account
holders a minimum of five free transactions (including both financial and non-financial
transactions) in a month at other bank ATMs.

 Banks may offer more number of transactions free of cost to their customers.
 The above does not apply to BSBDA as the number of withdrawals from BSBDA is subject
to the conditions associated with such accounts.
 Customers can be charged for transactions at ATMs over and above the mandated number
of free transactions. However, presently, these charges cannot exceed a maximum of
Rs.20/- per transaction (plus applicable taxes, if any) by his bank.

Failed ATM transaction when his / her account is debited

 Irrespective of use of card at an own bank ATM / other bank ATM / WLA, the customer
should lodge a complaint with the card issuing bank at the earliest.
 The contact number/s of concerned officers / toll free numbers / help desk numbers is
generally displays in the ATM premises.
 In case of a failed ATM transaction, the card issuing bank has been mandated to resolve
the customer complaint by re-crediting the customer’s account within 7 working days from
the date of complaint.
 Effective July 1, 2011, the card issuing bank has to pay compensation of Rs. 100/- per day
for delay in re-crediting the customer’s amount beyond 7 working days from the date of
receipt of complaint regarding failed ATM transactions. The compensation has to be
credited to the account of the customer without any claim being made by the customer.
 However, in order to become eligible for compensation, the customer is required to lodge
the complaint within 30 days of the transaction.

Customers should observe the following Do’s and Don’ts to keep their transactions at ATMs safe
and secure:

 Customer should conduct the ATM transaction in complete privacy.

 Only one card holder should enter and access the ATM kiosk at a time.
 The card holder should not lend his / her card to anyone.
 The card holder should not write the PIN on the card.
 The card holder should not share the PIN with anyone.
 The card holder should not let anyone see the PIN while it is being entered at the ATM.
 The card holder should never use a PIN that could be easily guessed.
 The card holder should never leave the card in the ATM.
 The card holder should register his / her mobile number with the card issuing bank for
getting alerts for transactions at ATMs. Any unauthorized card transaction in the account, if
observed, should be immediately reported to the card issuing bank.
 The card holder should be vigilant and check if any extra device/s is / are attached to the
ATMs. The device/s may be put in place to capture customer data fraudulently; if found, the
security guard / bank should be informed immediately.
 The card holder should keep an eye on suspicious movement/s of people around the
ATMs. He / She should be careful of strangers trying to engaging him / her in conversation or
offering assistance / help in operating the ATM.
 The card holder should remember that bank officials will never ask for card details or PIN
over telephone / email. So, he / she should not respond to any such communication from anyone
indicating that they represent his / her bank.

 The customer should contact the card issuing bank immediately on noticing the loss / theft
of the card and should request the bank to block the card.
 The Magnetic Stripe card stores card data on magnetic stripe present on the card while the
data in an EMV Chip & PIN card is stored in a chip. The EMV Chip & PIN cards are
considered to be safer when compared to Magnetic Stripe cards.
 Banks have been instructed by RBI to convert all existing Magnetic Stripe cards to EMV
Chip & PIN cards before December 31, 2018.

Prepared by :
Arvind Paranjape, M.Sc., CAIIB
paranjape.arvind@yahoo.com
9425067026