Unit-V

Meaning of ATM

 An automated teller machine (ATM) is a computerized

telecommunications device that provides the customers of a
financial institution / bank with access to financial transactions in a
public space without the need for a human clerk or bank teller
round the clock (24 hrs a day)
 ATM Card :On most modern ATMs, the customer is identified by
inserting a plastic ATM card with a magnetic stripe or a plastic
smartcard with a chip, that contains a unique card number and
some security information.
Security is provided by the customer entering a personal
identification number (PIN).
Functions of ATM

 24-hour access to cash

 View Account Balances & Mini-statements
 Order a Cheque Book / Account Statement
 Transfer Funds between accounts
 Refill your Prepaid card
 Pay your utility bills
 Deposit cash or cheques
 Change your PIN
 Learn about other products
 History Of ATM

 The ATM was invented by Scot John Shepherd-Barron.

 The world's first ATM was installed in a branch of Barclays in the northern London borough of
Enfield, Middlesex, in 1967.
 A mechanical cash dispenser was developed and built by Luther George Simjian and
installed in 1939 in New York City by the City Bank of New York.
 The first person to use the machine was Reg Varney of “On the Buses” fame, a British
television programme from the 1960s.
 The idea of a PIN stored on the card was developed by the British engineer John Rose in
1965.
 The modern, networked ATM was invented in Dallas, Texas, by Don Wetzel in 1968
 Notable historical models of ATMs include the IBM 3624 and 473x series, Diebold 10xx and
TABS 9000 series, and NCR 5xxx series.
Structure of ATM

 Card reader
 Keypad
 Speaker
 Display screen
 Receipt printer
 Cash dispenser
 NEFT, RTGS and IMPS

 NATIONAL ELECTRONIC FUND (NEFT):

NEFT is an electronic fund transfer system which operates on a DNS (Deferred Net Settlement)
basis which settles transactions in batches. At present, there are 11 settlements between 8 am and
6:30 pm between Monday and Saturday except 2nd and 4th Saturday as well as bank holidays. So, if
you make a transfer after a batch is processed, your transaction will be processed in the next
designated batch. If you make an online transfer after 6:30 pm, it will be processed at 8:00 on the
next working day, but the amount will be deducted immediately. You can check the RBI list of
financial institutions that provide NEFT services here. You can use the NEFT service through the
bank branch through cheques, DD or you can make the transfer using net banking facility in your
bank account. There is no minimum limit on the amount that can be transferred.
 REAL TIME GROSS SETTLEMENT (RTGS):
In RTGS the transactions are settled individually and not in batches. The
transaction is processed immediately after it is executed throughout the RTGS
business hours. The RTGS window is open from 8 am to 4 pm between
Monday and Saturday except 2nd and 4th Saturday as well as bank holidays.
The minimum limit on transfer of funds at a time is Rs 2 lakhs.
 IMMEDIATE PAYMENT SERVICE (IMPS):
IMPS It is an instant payment service available for money
transfer to bank accounts in India. It is ideal for transactions with
small amount. The main feature of IMPS service is that it is
available 24/7 including Sunday and bank holidays throughout
the year, which makes is particularly helpful during emergencies.
IMPS is basically used for transfers using the mobile phone number through
apps or mobile banking. A service provided by a host of banks including the
reputed banks like State Bank of India, ICICI Bank and Axis Bank. You can
also use IMPS in your net banking services for when you want to transfer
using account number details. The process is the same as NEFT. There is a
limit of Rs 2 lakhs if you use the online transfer using bank account in net
banking. Now, the limit is lower for app and mobile banking services which
puts constraints on how many times you can send money to a particular
customer ID or the amount you can send. The limits vary from bank to bank.
 Difference between NEFT,RTGS,IMPS

NEFT RTGS IMPS

Minimum transfer value Rs.1 Rs.2 lakh Rs.1
Maximum transfer value No limit Rs.10 lakh Rs.2 lakh
Type of settlement Batches One-on-one settlement One-on-one settlement
2 hours (subject to cut-off timings and
Speed of settlement Immediately Immediately
batches)
Weekdays: 12 batches between 8:00
a.m. - 6:30 p.m. Weekdays: 8:00 a.m. - 4:00 p.m
Saturday: 6 batches between 8:00 Saturdays: 9:00 a.m. - 4:30 p.m
Service availability 24/7
a.m. 1:00 p.m. Sunday and bank holidays:
Sunday and bank holidays: Unavailable
Unavailable

Up to Rs.10,000 - Rs.2.50 Up to Rs.10,000 - Rs.2.5

Between Rs.2 lakh up to Rs.5 lakh
From Rs.10,000 up to Rs.1 lakh - Rs.5 From Rs.10,000 up to
- Rs.25
Transaction fee From Rs.1 lakh up to Rs.2 lakh - Rs.15 Rs.1,00,000 - Rs.5
From Rs.5 lakh up to Rs.10 lakh -
From Rs.2 lakh up to Rs.5 lakh - Rs.25 From Rs.1,00,000 up to
Rs.50
From Rs.5 lakh up to Rs.10 lakh - Rs.50 Rs.2,00,000 - Rs.15

Online/Offline Both Both Online

Cheque Truncation System (CTS)

 Cheque Truncation System (CTS) or Image-based Clearing System (ICS), in India, is a

project of the Reserve Bank of India (RBI), commencing in 2010, for faster clearing of
cheques. CTS is based on a cheque truncation or online image-based cheque clearing system
where cheque images and magnetic ink character recognition (MICR) data are captured at the
collecting bank branch and transmitted electronically.
 Cheque truncation means stopping the flow of the physical cheques issued by a drawer to the
drawee branch. The physical instrument is truncated at some point enroute to the drawee branch
and an electronic image of the cheque is sent to the drawee branch along with the relevant
information like the MICR fields, date of presentation, presenting banks etc. This would
eliminate the need to move the physical instruments across branches, except in exceptional
circumstances, resulting in an effective reduction in the time required for payment of cheques,
the associated cost of transit and delays in processing, etc., thus speeding up the process of
collection or realization of cheques.
Ancillary services & Bancassurance

 They provide locker services for which they charge rent. They
issue guarantees for their customers and get a fee as commission,.
these extra services other than accepting deposits and lending are
known as Ancillary services which can boost the profits
of banks and are relatively risk free.
 Bancassurance is an arrangement between a bank and an insurance
company allowing the insurance company to sell its products to the
bank's client base. This partnership arrangement can be profitable
for both companies.
Wealth management Service &
Depository Services

 Wealth management is a high-level professional service that combines

financial and investment advice, accounting and tax services, retirement
planning, and legal or estate planning for one set fee. Some wealth
managers also provide banking services or advice on philanthropic
activities.
 Depository Services: Main function of Depository Services is the holding
securities either in certificated or uncertificated(dematerialized) form. In
the depository system, securities are held in depository accounts, which are
similar to holding funds in bank accounts. Transfer of ownership of
securities is done through simple account transfers.
 Cont…
Types of Depository Services: - 2 Types of Depository Services:
1- NSDL (National Securities Depository Limited)
2- CDSL (Central Depository Services Limited)

NSDL (National Securities Depository Limited): - This is the first central securities depository in
India based in Mumbai. It is promoted by institutions of national stature responsible for the economic
development of India.
NSDL is promoted by NSE (National Stock Exchange), IDBI (Industrial Development Bank of India
Limited), UTI (Unit Trust of India), and some of prominent banks in the country have taken a stake in
NSDL.
SBI, HDFC Bank, Axis Bank, OBC, Dena Bank, Canara Bank, Union Bank of India etc.

CDSL (Central Depository Services Limited) : -This is the second Indian central securities depository
based in Mumbai.
CDSL is promoted by Bombay Stock Exchange (BSE), State Bank of India(SBI), Bank of India, Bank
of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India.