Holiday Atm Drawals Could Hurt Banks

Even as bank employees in Mumbai began their three-day mini vacation yesterday, as many as 22 banks face a potential fraud of Rs 10 crore on their ATMs. This is because some banks switch off their on-line arrangement connecting the ATM machines to the back office records during holidays.

The 22 banks have put out 72 ATMs in the city and have issued about 11,000 cards. Normally, when the system is on-line, the withdrawal of money through the use of ATM card is possible only if the customer has sufficient balance in his account. This is aided by the computerised link between the ATM machine and the account records in the back office, said sources.

 

However, the tendency to put the ATMs off-line during holidays would result in a severance of this link. During the off-line periods, a customer can withdraw the maximum amount permitted on the card, usually Rs 3000 per day. But since this is off-line operation, the amount can be withdrawn irrespective of balance, or lack of it, in the account.

Considering the number of cards issued so far, and the maximum amount allowed to be withdrawn, the banks which have ATM facilities, face on the aggregate a potential unauthorised withdrawal of more than Rs three crore per day, or a total of Rs 10 crore in the three-day holidays.

This, of course, will not be for the first time that banks have to face this problem. In fact, many banks put off the computer link for a few hours even on working days when they take stocks and update records. Unauthorised withdrawals during this time have been reported in different banks.

Last year, a new private bank is believed to have lost nearly Rs 5 lakh in this fashion. If the problem has not been highlighted so far, it is because banks prefer to keep quiet about their losses through ATM frauds, just like the credit card losses.

Since it becomes a matter of prestige for them, they tend to push it under the carpet and ignore them, says the credit card division head of a nationalised bank.