Description
Responsible for Fake notes in ATM...
The unanswered questions of ATM fake notes, who is to be held Responsible?
Most ATMs (Automatic Teller Machines) in India simply dispense cash, but increasingly are being readied for a
host of other functions and capabilities, so the risk increases. According to the Reserve Bank of India (RBI) the
ATM machines should:
? Check the authenticity and fitness of notes, i.e. note processing machines/note sorting machines, and
machines which check only the authenticity of notes, i.e. note authentication machines. All these machines
shall classify the individual notes as either genuine or suspect.
? Perform authenticity check with reference to the features of genuine notes as disclosed by the Reserve Bank
of India from time to time. Any note which is not found to be having all the features of a genuine note shall be
classified by the machine as suspect.
Is this objective met? Not really.
There are two broad ways in which currency notes are stuffed into ATMs in India. One, by the bank staff
themselves, usually for the 'onsite' machines. Two, by specific agencies which do the stuffing- often as
common carriers for multiple banks. Many sources tells that:
1) None of the banks in India, currency chests or agencies have facilities for 100%verification at all stages of
currency notes headed for ATMs-except for some very specific marked ATMs which are located in VVIP
locations. Yes, this is being corrected, but the speed of growth of ATMs is also high.
2) The chances of genuine cash sent by the banks directly from the cash chest/teller being swapped for
counterfeit notes are not so high for onsite ATMs. However, it does exist as a higher risk for off-site ATMs, as
well as for ATMs stuffed by agencies. The arrival of 'white' ATMs will further muddy the waters.
3) The global concept and practice of sending only pre-stuffed and sealed 'cassettes' for insertion into the
larger 'cartridges' for the dispensers and then to be placed inside the 'vault' of ATMs is being resisted by banks
and agencies in India. These pre-sealed 'cassettes' provide physical security by 'neutralizing' currency notes in
case of physical attacks and also provide note-by-note accountability in case of transactional lacunae.
What would we, as consumers of currency notes, really want and deserve? After all, the issue of
FICN/counterfeit currency notes is very real, and at the very least, some steps have to be taken to protect us,
assuming that almost all ATM transactions are for consumers who not in the fake money business. Here are
some simple steps which need to be taken, and which we should demand:
1) All ATMs in India need to be provided with a centralized RBI reference number, and this must be displayed
prominently at the location, as well as on the ATM and also on the paper trail.
2) All ATMs must indicate whether they are "sealed cassette stuffed" or "loose stuffed".
3) Performance of ATMs-failed transactions, disputed transactions, down-times, frequency of FICN and similar
data must be available online.
4) ATMs can then be provided either 'star' rating or percentile performance rating, which needs to also be
displayed on the ATM.
5) Most importantly, the ATM must indicate whether it is providing 100% authentic currency notes or not, and
by what method.
6) Certain other safeguards, like silent alarm provision as well as provision of a 'cover' on the key-pad, need to
be incorporated too.
7) Disabled access is another issue which needs to be resolved.
A bank is not doing a customer a big favor by providing an ATM; it is actually doing itself a favor primarily by
reducing the cost and effort of human interaction. In exchange, a customer must know what level of service to
expect, and RBI needs to enforce this. Today's customer is very aware of what is going on and is willing to pay
a premium for better and more reliable service. The earlier this is done, and certainly before the introduction
of "white ATMs", the better.
Banks have been flooded with complaints of counterfeit currency notes coming out of ATM machines. In such
cases, it is the bank customer who suffers the loss as banks seize the notes. "We have asked bank managers to
be sympathetic and take into consideration the circumstances when a person approaches with fake notes,"
the governor said. Banks must check currencies for genuineness and cleanliness before putting them into ATM
machines, he said.
The central bank detected 5.21 lakh pieces of counterfeit notes in different denominations in 2011-12, 20%
more than in the previous fiscal, signaling a rise in circulation of fake notes and better detection techniques as
well. About 93% detection of counterfeit notes was done by bank branches and customers lost their money.
According to existing rules, detection of such notes is reported to the police.
The RBI, in co-ordination with the central government, has been pursuing with all state governments to
nominate a nodal police station in every district for the purpose of reporting such cases. If bank branches or
treasury offices detect five or more fake notes in a single transaction, an FIR must be registered.
Governor Duvvuri Subbarao said the central bank is working with the government to amend the law and make
the source of counterfeit currency legally liable.
"We are negotiating with the government for reviewing and changing the law," Subbarao said in Guwahati
after the RBI central board meeting. The law makes the holder of counterfeit currency notes responsible for
their value.
Asst. Prof. Sandeep Kumar Mishra
doc_434083711.docx
Responsible for Fake notes in ATM...
The unanswered questions of ATM fake notes, who is to be held Responsible?
Most ATMs (Automatic Teller Machines) in India simply dispense cash, but increasingly are being readied for a
host of other functions and capabilities, so the risk increases. According to the Reserve Bank of India (RBI) the
ATM machines should:
? Check the authenticity and fitness of notes, i.e. note processing machines/note sorting machines, and
machines which check only the authenticity of notes, i.e. note authentication machines. All these machines
shall classify the individual notes as either genuine or suspect.
? Perform authenticity check with reference to the features of genuine notes as disclosed by the Reserve Bank
of India from time to time. Any note which is not found to be having all the features of a genuine note shall be
classified by the machine as suspect.
Is this objective met? Not really.
There are two broad ways in which currency notes are stuffed into ATMs in India. One, by the bank staff
themselves, usually for the 'onsite' machines. Two, by specific agencies which do the stuffing- often as
common carriers for multiple banks. Many sources tells that:
1) None of the banks in India, currency chests or agencies have facilities for 100%verification at all stages of
currency notes headed for ATMs-except for some very specific marked ATMs which are located in VVIP
locations. Yes, this is being corrected, but the speed of growth of ATMs is also high.
2) The chances of genuine cash sent by the banks directly from the cash chest/teller being swapped for
counterfeit notes are not so high for onsite ATMs. However, it does exist as a higher risk for off-site ATMs, as
well as for ATMs stuffed by agencies. The arrival of 'white' ATMs will further muddy the waters.
3) The global concept and practice of sending only pre-stuffed and sealed 'cassettes' for insertion into the
larger 'cartridges' for the dispensers and then to be placed inside the 'vault' of ATMs is being resisted by banks
and agencies in India. These pre-sealed 'cassettes' provide physical security by 'neutralizing' currency notes in
case of physical attacks and also provide note-by-note accountability in case of transactional lacunae.
What would we, as consumers of currency notes, really want and deserve? After all, the issue of
FICN/counterfeit currency notes is very real, and at the very least, some steps have to be taken to protect us,
assuming that almost all ATM transactions are for consumers who not in the fake money business. Here are
some simple steps which need to be taken, and which we should demand:
1) All ATMs in India need to be provided with a centralized RBI reference number, and this must be displayed
prominently at the location, as well as on the ATM and also on the paper trail.
2) All ATMs must indicate whether they are "sealed cassette stuffed" or "loose stuffed".
3) Performance of ATMs-failed transactions, disputed transactions, down-times, frequency of FICN and similar
data must be available online.
4) ATMs can then be provided either 'star' rating or percentile performance rating, which needs to also be
displayed on the ATM.
5) Most importantly, the ATM must indicate whether it is providing 100% authentic currency notes or not, and
by what method.
6) Certain other safeguards, like silent alarm provision as well as provision of a 'cover' on the key-pad, need to
be incorporated too.
7) Disabled access is another issue which needs to be resolved.
A bank is not doing a customer a big favor by providing an ATM; it is actually doing itself a favor primarily by
reducing the cost and effort of human interaction. In exchange, a customer must know what level of service to
expect, and RBI needs to enforce this. Today's customer is very aware of what is going on and is willing to pay
a premium for better and more reliable service. The earlier this is done, and certainly before the introduction
of "white ATMs", the better.
Banks have been flooded with complaints of counterfeit currency notes coming out of ATM machines. In such
cases, it is the bank customer who suffers the loss as banks seize the notes. "We have asked bank managers to
be sympathetic and take into consideration the circumstances when a person approaches with fake notes,"
the governor said. Banks must check currencies for genuineness and cleanliness before putting them into ATM
machines, he said.
The central bank detected 5.21 lakh pieces of counterfeit notes in different denominations in 2011-12, 20%
more than in the previous fiscal, signaling a rise in circulation of fake notes and better detection techniques as
well. About 93% detection of counterfeit notes was done by bank branches and customers lost their money.
According to existing rules, detection of such notes is reported to the police.
The RBI, in co-ordination with the central government, has been pursuing with all state governments to
nominate a nodal police station in every district for the purpose of reporting such cases. If bank branches or
treasury offices detect five or more fake notes in a single transaction, an FIR must be registered.
Governor Duvvuri Subbarao said the central bank is working with the government to amend the law and make
the source of counterfeit currency legally liable.
"We are negotiating with the government for reviewing and changing the law," Subbarao said in Guwahati
after the RBI central board meeting. The law makes the holder of counterfeit currency notes responsible for
their value.
Asst. Prof. Sandeep Kumar Mishra
doc_434083711.docx