Page 91 - DCOM208_BANKING_THEORY_AND_PRACTICE

Banking Theory and Practice

Notes

Caselet Bank ATMs Stop Sucking in Cash after RBI Direction

ext time you go to an ATM to withdraw cash, don’t worry about the banknotes
getting sucked back by the machine if not collected immediately, as RBI has
Nasked all banks to immobilise the ‘cash retraction facility’.
At the same time, customers will have to be extra careful in collecting the cash dispensed
by the ATM, as they cannot later claim the money from the bank, which was the case when
this ‘cash retraction facility’ was in place at the ATMs. Most of the banks, including HDFC
Bank, Axis Bank and Canara Bank, have already removed the cash retraction facility from
all their ATMs, while the withdrawal process for this facility is underway for few remaining
ATMs. As per RBI directions, the banks are communicating to their customers about the
withdrawal of this facility, under which the cash goes back into the ATM machine if not
collected within a stipulated time, which is generally 10-15 seconds, but varies from bank
to bank.
The facility was initially implemented to avoid the cases of someone else getting the
money, if the actual cardholder forgets to collect the withdrawn cash before leaving the
ATM. However, RBI in the past one year has come across banks reporting several instances
of frauds pertaining to misuse of cash retraction facility at the ATMs.
The typical modus operandi has been to hold on to a few pieces of notes in ATM machines
that have cash retraction system, while allowing one or two pieces of notes to be retracted
and then claiming non-receipt of cash.
Since retracted transactions are credited back to the customer’s account, the balance in the
fraudster’s account remains unaffected even after collecting bulk of the delivered cash.
The ATMs do not have the capability to count the pieces of retracted notes, thus leaving a
loophole for committing such frauds.
Source: http://news.oneindia.in/2012/09/23/bank-atms-stop-sucking-in-cash-after-rbi-direction-
1074654.html

Details on an ATM card

Figure 6.2: Front of an ATM Card

Source: http://news.thewindowsclub.com

86 LOVELY PROFESSIONAL UNIVERSITY