Automated Teller Machine:

An automated teller machine (ATM) is an electronic banking outlet that allows

customers to complete basic transactions without the aid of a branch
representative or teller. Anyone with a credit card or debit card can access cash
at most ATMs.
ATMs are convenient, allowing consumers to perform quick self-service
transactions such as deposits, cash withdrawals, bill payments, and transfers
between accounts. Fees are commonly charged for cash withdrawals by the
bank where the account is located, by the operator of the ATM, or by both.
Some or all of these fees can be avoided by using an ATM operated directly by
the bank that holds the account.

ATMs are known in different parts of the world as automated bank machines
(ABM) or cash machines.

The automated teller machine (ATM) is an automatic banking machine (ABM)

that allows the customer to complete basic transactions without any help from
bank representatives. There are two types of automated teller machines (ATMs).
The basic one allows the customer to only draw cash and receive a report of the
account balance. Another one is a more complex machine that accepts the
deposit, provides credit card payment facilities and reports account information
The introduction of ATM’s has given the customers the facility of round the
clock banking. The ATM’s are used by banks for making the customers dealing
easier. ATM card is a device that allows customer who has an ATM card to
perform routine banking transaction at any time without interacting with human
teller. It provides exchange services. This service helps the customer to
withdraw money even when the banks are closed. This can be done by inserting
the card in the ATM and entering the Personal Identification Number and secret
Password.
ATM’s are currently becoming popular in India that enables the customer to
withdraw their money 24 hours a day and 365 days. It provides the customers
with the ability to withdraw or deposit funds, check account balances, transfer
funds and check statement information. The advantages of ATM’s are many. It
increases existing business and generates new business. It allows the customers.

 To transfer money to and from accounts.

 To view account information.
 To order cash.
 To receive cash.
 Advantages of ATM’s:
To the Customers

 ATM’s provide 24 hrs., 7 days and 365 days a year service.

 Service is quick and efficient
 Privacy in transaction
 Wider flexibility in place and time of withdrawals.
 The transaction is completely secure — you need to key in Personal
Identification Number (Unique number for every customer).

To Banks

 Alternative to extend banking hours.

 Crowding at bank counters considerably reduced.
 Alternative to new branches and to reduce operating expenses.
 Relieves bank employees to focus on more analytical and innovative work.
 Increased market penetration.

ATM’s can be installed anywhere like Airports, Railway Stations, Petrol

Pumps, Big Business arcades, markets, etc. Hence, it gives easy access to the
customers, for obtaining cash.
The ATM services provided first by the foreign banks like Citibank, Grind lays
bank and now by many private and public sector banks in India like ICICI
Bank, HDFC Bank, SBI, UTI Bank etc. The ICICI has launched ATM Services
to its customers in all the Metropolitan Cities in India. By the end of 1990
Indian Private Banks and public sector banks have come up with their own
ATM Network in the form of “SWADHAN”. Over the past year upto 44 banks
in Mumbai, Vashi and Thane, have became a part of “SWADHAN” a system of
shared payments networks, introduced by the Indian Bank Association (IBA).
Advantages of ATM
Provide Convenience To Customers
Customers are able to do financial transactions conveniently with the use of
ATMs. They can avail various banking services and can do payments seating at
their home comfort. Various payments for online shopping, at restaurants and
various other places payment can be made using ATM. Nowadays ATM are
installed at all important places like railway station, airports, hospitals etc.
which facilitate the people in withdrawing their money whenever they want.

Offer 24×7 Service

ATMs provides 24 hours a day, 7 days a week and 365 days a year to all its
customers. Unlike bank branches, it does not have any time schedule for its
operations. Customers can access their bank accounts and withdraw their money
at any time of day or night as per their convenience.

Reduce Banks Workload

ATMs have an efficient role in reducing the workload of the banking industry.
It has relieved customers as they can avail various banking services by using
ATM without visiting the bank branches. Customers are not required to stand in
long queues and fill up various forms for availing basic withdrawal and deposit
facilities. It helps in reducing the work pressure on bank staff and provides
flexibility to its operations.

Access To Bank Account From Anywhere

Account can be accessed by customer using ATM from any part of the country
or even worldwide. ATM machines are installed in different parts of the country
at all convenient places. Customers don’t need to carry cash while travelling
and they can easily withdraw money any place they are travelling.

Minimizes Transactions Cost

ATM has reduced the manpower need as all transactions are processed and
monitored using automated computerized systems. There is less human
intervention in work operations which reduce overall cost.

Disadvantages of ATM

Charges Fees
Usage of ATMs by customers invites charging various fees for using it. Bank
charges routines charges as per their standard rates for providing them ATM
facility. Customers are also required to pay various tax while doing transactions
online using the ATM.

Limitation On Cash Withdrawal

Bank imposes restrictions on withdrawal limit of their customers using ATM.
There are limitations on both no. of free transactions and the amount of money
that can be withdrawn per transactions. Banks set withdrawal amount limit for
their customers. Most of the banks do not allow withdrawal of more than 25,000
at a time.

Possibility Of Frauds
Customers performing online transactions using ATM are likely to be affected
by various frauds. There is a chance of stealing various account information by
online hackers while doing online transactions. These online hackers through
various suspicious activities can get access to your account and loot your
money.
 Non-Reachable In Rural Areas
Banks in rural areas of our country have limited computerized branches and
depends mainly on manpower for its various operations. There are limited ATM
machines installed in rural areas which also do not operate properly. Therefore
ATM services are not properly available in rural areas.

4) E-Cheques: The e-cheques consists five primary facts. They are the
consumers, the merchant, consumer’s bank the merchant’s bank and the e-mint
and the clearing process. This cheqing system uses the network services to issue
and process payment that emulates real world chaquing. The payer issue a
digital cheques to the payee and the entire transactions are done through
internet. Electronic version of cheques are issued, received and processed. A
typical electronic cheque transaction takes place in the following manner:

 The customer accesses the merchant server and the merchant server presents its
goods to the customer.
 The consumer selects the goods and purchases them by sending an e-cheque to
the merchant.
 The merchant validates the e-cheque with its bank for payment authorization.
 The merchant electronically forwards the e-cheque to its bank.
 The merchant’s bank forwards the e-cheque to the clearing house for cashing.
 The clearing house jointly works with the consumer’s bank clears the cheque
and transfers the money to the merchant’s banks.
 The merchant’s bank updates the merchant’s account.
 The consumer’s bank updates the consumer’s account with the withdrawal
information.

The e-chequing is a great boon to big corporate as well as small retailers. Most
major banks accept e-cheques. Thus this system offers secure means of
collecting payments, transferring value and managing cash flows.
5) Electronic Funds Transfer (EFT): Many modern banks have computerized
their cheque handling process with computer networks and other electronic
equipment’s. These banks are dispensing with the use of paper cheques. The
system called electronic fund transfer (EFT) automatically transfers money
from one account to another. This system facilitates speedier transfer of funds
electronically from any branch to any other branch. In this system the sender
and the receiver of funds may be located in different cities and may even bank
with different banks. Funds transfer within the same city is also permitted. The
scheme has been in operation since February 7, 1996, in India. The other
 important type of facility in the EFT system is automated clearing houses.
These are the computer centers that handle the bills meant for deposits and the
bills meant for payment. In big companies pay is not disbursed by issued
cheques or issuing cash. The payment office directs the computer to credit an
employee’s account with the person’s pay.
6) Telebanking: Telebanking refers to banking on phone services.. a customer
can access information about his/her account through a telephone call and by
giving the coded Personal Identification Number (PIN) to the bank.
Telebanking is extensively user friendly and effective in nature.

 To get a particular work done through the bank, the users may leave his
instructions in the form of message with bank.
 Facility to stop payment on request. One can easily know about the cheque
status.
 Information on the current interest rates.
 Information with regard to foreign exchange rates.
 Request for a DD or pay order.
 DeMat Account related services.
 And other similar services.

5) Mobile Banking: A new revolution in the realm of e-banking is the

emergence of mobile banking. On-line banking is now moving to the mobile
world, giving everybody with a mobile phone access to real-time banking
services, regardless of their location. But there is much more to mobile banking
from just on-lie banking. It provides a new way to pick up information and
interact with the banks to carry out the relevant banking business. The potential
of mobile banking is limitless and is expected to be a big success. Booking and
paying for travel and even tickets is also expected to be a growth area.
According to this system, customer can access account details on mobile using
the Short Messaging System (SMS) technology where select data is pushed to
the mobile device. The wireless application protocol (WAP) technology, which
will allow user to surf the net on their mobiles to access anything and
everything. This is a very flexible way of transacting banking business. Already
ICICI and HDFC banks have tied up cellular service provides such as Airtel,
Orange, Sky Cell, etc. in Delhi and Mumbai to offer these mobile
banking services to their customers.

6) Internet Banking:
Online banking allows a user to conduct financial transactions via the Internet.
Online banking is also known as Internet banking or web banking.
 Online banking offers customers almost every service traditionally available
through a local branch including deposits, transfers, and online bill payments.
Virtually every banking institution has some form of online banking, available
both on desktop versions and through mobile apps.

Internet banking involves use of internet for delivery of banking products and
services. With internet banking is now no longer confirmed to the branches
where one has to approach the branch in person, to withdraw cash or deposits a
cheque or request a statement of accounts. In internet banking, any inquiry or
transaction is processed online without any reference to the branch (anywhere
banking) at any time. The Internet Banking now is more of a normal rather than
an exception due to the fact that it is the cheapest way of providing banking
services. As indicated by McKinsey Quarterly research, presently traditional
banking costs the banks, more than a dollar per person, ATM banking costs 27
cents and internet banking costs below 4 cents approximately. ICICI bank was
the first one to offer Internet Banking in India.
Benefits of Internet Banking:

 Reduce the transaction costs of offering several banking services and diminishes
the need for longer numbers of expensive brick and mortar branches and staff.
 Increase convenience for customers, since they can conduct many banking
transaction 24 hours a day.
 Increase customer loyalty.
 Improve customer access.
 Attract new customers.
 Easy online application for all accounts, including personal loans and mortgages

Financial Transaction on the Internet:

 Electronic Cash: Companies are developing electronic replicas of all existing

payment system: cash, cheque, credit cards and coins.
 Automatic Payments: Utility companies, loans payments, and other businesses
use on automatic payment system with bills paid through direct withdrawal
from a bank account.
 Direct Deposits: Earnings (or Government payments) automatically deposited
into bank accounts, saving time, effort and money.
 Stored Value Cards: Prepaid cards for telephone service, transit fares, highway
tolls, laundry service, library fees and school lunches.
 Point of Sale transactions: Acceptance of ATM/Cheque at retail stores and
restaurants for payment of goods and services. This system has made
functioning of the stock Market very smooth and efficient.
 Cyber Banking: It refers to banking through online services. Banks with web
site “Cyber” branches allowed customers to check balances, pay bills, transfer
funds, and apply for loans on the Internet.
 Advantages of Online Banking
 Convenience is a major advantage of online banking. Basic banking
transactions such as paying bills and transferring funds between accounts
can easily be done 24 hours a day, seven days a week, wherever a
consumer wishes.
 Online banking is fast and efficient. Funds can be transferred between
accounts almost instantly, especially if the two accounts are held at the
same institution. Consumers can open and close a number of different
accounts online, from fixed deposits to recurring deposit accounts that
typically offer higher rates of interest.
 Consumers can also monitor their accounts regularly closely, allowing
them to keep their accounts safe. Around-the-clock access to banking
information provides early detection of fraudulent activity, thereby acting
as a guardrail against financial damage or loss.
 Disadvantages of Online Banking
 For a novice online banking customer, using systems for the first time
may present challenges that prevent transactions from being processed,
which is why some consumers prefer face-to-face transactions with a
teller.
 Online banking doesn't help if a customer needs access to large amounts
of cash. While he may be able to take a certain amount at the ATM—
most cards come with a limit—he will still have to visit a branch to get
the rest.
 Although online banking security is continually improving, such accounts
are still vulnerable when it comes to hacking. Consumers are advised to
use their own data plans, rather than public Wi-Fi networks when using
online banking, to prevent unauthorized access.

Difference between Mobile Banking and Internet Banking

Mobile Banking Internet Banking

It can be done through any electronic

It Requires smartphone
device which support internet.

It can be done with and without It requires Internet.

 internet

It can be access through basic mobile

It requires a smart phone.
phone.

It provide more transactional

Banking services are limited when facilities i.e. checking account
you are using mobile banking from a statement, transferring funds,
basic phone. ordering a new cheque book, to
opening new FD,

It requires the respective banking app

It does not required to download any
to be downloaded to perform the
particular software or program.
banking function.

9) Demat:
Demat Account is an account that is used to hold shares and securities in
electronic format. The full form of Demat account is a dematerialised account.
The purpose of opening a Demat account is to hold shares that have been
bought or dematerialised (converted from physical to electronic shares), thus
making share trading easy for the users during online trading.
Demat is short for de-materialisation of shares. In short, Demat is a process
where at the customer’s request the physical stock is converted into electronic
entries in the depository system. In January 1998 SEBI (Securities and
Exchange Board of India) initiated DEMAT ACCOUNT System to regulate and
to improve stock investing. As on date, to trade on shares it has become
compulsory to have a share demat account and all trades take place through
demat.

What is dematerialisation?

Dematerialisation is the process of converting the physical share certificates into

electronic form, which is a lot easier to maintain and is accessible from
anywhere throughout the world. An investor who wants to trade online needs to
open a Demat with a Depository Participant (DP). The purpose
of dematerialisation is to eliminate the need for the investor to hold physical
 share certificates and facilitating a seamless tracking and monitoring of
holdings.

Though the purpose of the demat remains same for all investors, there are
different types of demat account for different investors.
How many types of demat accounts are there?
There are 3 main types of demat accounts:
Regular Demat Account:
A regular demat account used by investors residing in India.
Repatriable Demat Account:
A demat account used by NRIs under which funds can be transferred abroad.
This type of demat account requires an NRE bank account associated with it.
Non-Repatriable Demat Account:
A demat account used by NRIs under which funds cannot be transferred abroad.
This type of demat account requires an NRO bank account associated with it.

How to Operate DEMAT ACCOUNT?

One needs to open a Demat Account with any of the branches of the bank. After
opening an account with any bank, by filling the demat request form one can
handover the securities. The rest will be taken care by the bank and the
customer will receive credit of shares as soon as it is confirmed by the
Company/Register and Transfer Agent. There is no physical movement of share
certification any more. Any buying or selling of shares is done via electronic
transfers.

 If the investor wants to sell his shares, he has to place an order with his broker
and give a “Delivery Instruction” to his DP (Depository Participant). The DP
will debit hi s account with the number of shares sold by him.
 If one wants to buy shares, he has to inform his broker about his Depository
Account Number so that the shares bought by him are credited in to his account.
 Payment for the electronic shares bought or sold is to be made in the same way
as in the case of physical securities.