The evolutionary trend from cash economy to cheque economy and onwards to plastic card economy is witnessed in the introduction of ATMs. ATM or Automated Teller Machine outwardly appears like a human weighing machine kept in Railway Platforms.
These days, ATMs are securely placed inside the walls of bank’s premises. While a weighing machine measures the weight of a person in kilograms, the ATM measures the bank balance of a person in rupees. In the weighing machine you insert a coin and you get a card telling your weight and fortune.
In ATM you insert a plastic card and you get brand new currency notes and your bank balance. Can we all get such currency notes from ATM? Is it a lottery? Let us see how ATM works.
The Current and Savings Bank Account holders of a bank having certain minimum balance (says Rs. 10,000 in SB A/Cs or Rs. 50,000 in Current A/Cs) are issued with an ATM card. It is a plastic card having magnetic strip with the Account number of the person.
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When the card is inserted in the ATM, the machine’s sensing equipment identifies the account holder and asks for his identification code number. Every account holder is given a separate code number through computers and it is not known even to bank staff.
This code number is like the secret code number available in telephone connection for use of STD facility. When the number is asked by the ATM (it comes on the ATM screen), the cardholder identifies himself/herself by pressing relevant number buttons on the machine.
The machine verifies the account number on the ATM card with secret code number stored in the ATM. When the numbers tally, the machine shows in the screen as to what he wants? This is done through a Menu Screen, like a Menu Card in hotels or restaurants.
You can transact almost all types of bank transactions through ATM. In case, you (as ATM cardholder) want to withdraw cash, you press the number buttons for the amount you decide to withdraw. The machine immediately throws out fresh currency notes.
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The banks generally restrict the maximum amount one can withdraw. Also you may use the machine only once a day for withdrawals. The amount withdrawn is immediately debited to the concerned account through the entries generated by the machine.
Similarly, money can be deposited through ATM for credit to your account. When the Menu screen appears on the ATM, you should indicate you want to deposit money. The machine will flash out a cover you deposit the money (no coins) cash, cheques, etc., into the envelope, close it and put it back into the Machine.
The Machine prints the account number on the envelope and stores it. Like the postman collecting letters from Post Box, the bank staff collects the cover, verify the cash and credit the account.
The ATM also tells you your bank balance, if you ask for it. The ATM facility is available round the clock. The main protection in ATM card against wrong use is the secret code number. Like someone knowing your STD secret code can misuse your telephone, similarly someone knowing your ATM secret code can also misuse and draw money from your account.
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HSBC bank is the first bank in India to offer ATM facility in 1987. Presently, a number of Indian and Foreign Banks are offering ATM facility but mostly in cities. There is ease and privacy of operation through self service.
ATMs have many advantages, some of which are given below:
(i) In ATM one can draw cash round the clock (for 24 hours a day) and no employee interface is required.
(ii) ATM provides customer not having credit card facilities an alternative for obtaining cash when required.
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(iii) It eliminates the need for the customers to travel to the branch at which his accounts are maintained if the machines are conveniently located and networked.
(iv) Automatic and instantaneous accounting is possible.
(u) When labour cost is high the technology provides a cost effective solution.
(vi) Customers can deposit cash/instruments and leave instructions for the requirements of statement of accounts, transfer, etc.
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(vii) As transactions are handled through software, without cash or instruments scope for frauds, robberies and misappropriation is reduced.