ATM Banking in India: Problems and

Prospects

Presented By:

Ashish Saini

Dr. Ravindra Kumar Saini

INTRODUCTIONATM (Automated Teller Machine) or a cash point

is a computerized machine.ATMs plays a vital role in facilitating the banking

services to banks as well as customers.ATM is the back bone of retail banking sector.

The idea of ATM machine developed simultaneous in Japan, Sweden, U.K and U.S.A.

The first cash dispenser machine developed by “Luther George Simjian ” in Feb.1963, which known as “Bankograph”.

The second dispenser machine developed by John Shepherd Barron which matched PIN(Personal Identification Number).

This machine known as “DACS”.The first modern ATM use in Dec. 1972 in UK.The IBM

2984 designed on the request of “Lloyds Bank”.

(Contd.)

This design was similar in function of today’s machines.

HSBC-Honkong and Shanghai Banking Corporation introduce the first ATM in India in 1987.

Table:1 Growth of ATMs in India

Year Number of ATM

2005-06 21,110

2006-07 25,247

2007-08 34,547

2008-09 43,651

2009-10 57,765

2010-11 76,871

Source :-Cyber Media Estimates Research in Banking 2010

Growth of ATM in India

2005-06 2006-07 2007-08 2008-09 2009-10 2010-110

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Number of ATM

Source:Report on Trend and Progress of Banking in India 2010-11

Growth of ATMs in the World

Year Number of ATM

2007 1,780,189

2008 1,912,178

2009 2,029,224

2010 2,154,970

2011 2,235,835

2012 2,407,775

2013 2,609,160

2014 2,848,190

Source: Global ATM Market and Forecasts to 2011 (Retail Banking Research)

Growth of ATMs World wide

2007 2008 2009 2010 2011 2012 2013 20140

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Number of ATM

Source: Global ATM Market and Forecasts to 2014 (Retail Banking Research)

Functions of ATM The concept of ATM is 24× 7× 365. Flexibility of using ATM of other banks i.e. we

can make transaction from any ATM while our account not in same bank.

Can recharge their mobile phone prepaid connection.

Pay the bills. Money transfer from one account to another one.

(contd.)

Check the balance of account at any time. Register their mobile number for account details. Deposit the cheques in account.

Problems with ATMs Problems of ATMs categories in two category :

1) Problem faced by Customers: They didn’t receive cash while the is account

debited. Wrong insert the ATM card. This problem is more

common with new ATM users who are not familiar with ATM machine.

They didn’t receive slip of account balance.

(contd.)

Money transfer problem. Some time money stuck in machine at the time

of transaction. Some time machine didn’t accept ATM cards. Time out problem when the customer late for any

step of processing. Customer face the problem when the process of

bank is change. When cash not available.

2) Problem faced by Banks : Theft money from ATMs. Burglary of ATMs (including theft of entire

ATMs). System problem (including server down). System failure (system crash or the software not

work properly). Hack the Bank’s site which affect whole

banking system.

Factor For Growth of ATM Make transaction any time and more than one

time in a day. Take less time to make a transaction than a teller

in banks. Easy to use for people. Much reliable i.e. no body can access your

account without your permission. (contd.)

It reduce the bank ‘s work load. Accurate transaction. Can make payment for purchase anything.

Cost of Transaction with various mode of Banking

Mode Cost Per Transaction (in Rs.)

Teller System 1

ATM 0.45

Phone 0.45

Debit Card 0.2

Internet 0.1

Source: IBA Bulletin special issue 2005

teller ATM Phone Debit Internet0

0.2

0.4

0.6

0.8

1

1.2

Cost in Rupees

Source: IBA Bulletin special issue 2005

Conclusion As the banking sector computerize day to day, and

ATM have became a part of modern banking system.

The banks in developing country adopt ATMs to improve their own internal process and also for increase facilities and services of their customers.

Now customers become aware about this machine. The growth of ATM rapidly high at the world wide

level also in India. This technology is simple, safe and secure and

people feel satisfaction to use this.

Thank you