Friday, 24 February 2017

No child's play; An ATM can also dispense Children's Bank notes

ATMs are not designed to check the genuineness of currency notes at the time of dispensing. However, if a bank customer attempts to deposit fake currency, the machine will not accept.

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How likely is it for your ATM to dispense fake notes with markings like Children’s Bank of India instead of genuine currency issued by the Reserve Bank of India (RBI)?

“Extremely rare, but possible,” says Navroze Dastur, Managing Director, NCR Corporation, India & South Asia told Moneycontrol.

It was reported recently that a State Bank of India ATM dispensed fake currency issued by ‘Children’s Bank of India’ instead of legal tender by the RBI.

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Dastur said that ATMs are not designed to check the genuineness of currency notes at the time of dispensing. “If a bank customer is depositing fake currency through the ATMs, the machine will not accept it. But if a cash-in-transit company fills the ATMs with fake notes the machines have no way to check whether the notes is genuine or not. It will dispense whatever is loaded,” Dastur said.

NCR Corporation is one of the leaders in managing ATMs worldwide. The company’s global managed services center at Mumbai remotely manages over 20,000 ATMs. NCR systems on an average facilitates over 550 million transactions daily.

Dastur said that the recent event of swapping of genuine currency with fake ones can occur at any point of the sequence of events that leads to ATMs being filled with fresh currency notes. “Such a thing can happen during the sequence of cash being filled in the ATMs,” Dastur said.

Dastur explained that the exercise of loading cash in an ATM starts with a managed service provider which acts on behalf of the bank that outsources the task placing an indent with a cash-in-transit company. Thus, the service provider places an indent for say Rs 5 crore or Rs 10 crore for the day to be loaded in 100 or 200 ATMs to the cash-in-transit company, which in turn goes to the bank’s currency chest with to collect the cash against the indent. “The system requires the currency chest to authenticate, validate and count the notes. Such validation is not the responsibility of either the managed service provider or the cash-in-transit company,” Dastur said.

Once cash is received by the cash-in-transit company, their vans go and fill the requisite cash in each ATM. “There is a custodian and armed guard and driver in the van. The cash is physically handled and loaded. Swapping of currency can happen at any time between the currency chest handing over the cash and the time at which it is put in the ATMs. There is a lacunae in the system which needs to be looked into,” Dastur said.

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