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India – ATMs run into legal hurdle

New Delhi : Banks may not be able to restart their automated teller machines (ATMs) any time soon because of a legal hurdle created by an American company withdrawing its software licence to a private Indian company servicing over 40,000 ATMs for more than 30 leading public and private banks across India and warning banks not to use its software.

A realisation dawned on the Finance Ministry only on Friday when the ATMs did not start functioning as announced by Prime Minister Modi on Tuesday and the banks expressed its helplessness without recalibration of the machines and the software changes to allow dispensation of the new Rs 2,000 notes.

The Chennai-based Financial Software and Systems Private Limited (FSS) that was managing these ATMs through its own network of highly professional partners and vendors did not respond to the banks’ calls for recalibrating them in view of losing the licence it had from ACI Worldwide Inc. since 2001.

The 1975-incorporated ACI Worldwide, a payment systems company headquartered in Naples, Florida, providing electronic payment softwares, on Friday issued a public notice in newspapers through its Mumbai-based general manager for Middle East, Africa and South Asia, that it has terminated agreement with FSS with effect from November 1, 2016 and as such the banks cannot operate the FSSNet platform using its software products.

Warning that the banks and institutions taking the services from FSS to migrate from FSSNet platform, the notice says they will be infringing intellectual property rights and proprietary rights if the ACI’s soft products are used and ACI reserves its right to initiate appropriate legal action against such infringement.

The notice says the ACI issued a notice to FSS on August 02, 2016 to cure all breaches of its obligations under the agreement by September 01, 2016, failing which the agreement was to be terminated from November 1, 2016. Instead, FSS communicated on September 01, 2016 that it is not in breach of the agreement. “Since the breaches of the agreement were not cured by FSS, the agreement has been terminated with effect from September 01, 2016,” the notice added.

This explains failure of the RBI’s announcement Tuesday night that recalibration of the ATMs may take a while and that “once the ATMs are functional, you can withdraw from ATMs up to a maximum of Rs 2,000 per card per day up to 18 November, 2016 and the limit will be raised to Rs 4,000 per day per card from 19 November 2016 onwards.”

LOGISTICS: Both bankers and ATM service providers cite two major issues of logistic and quantum of money. They say the Rs 100 notes are in short supply and hence ATMs dispensing them are bound to run out of cash. The bankers are quite frank that it will take a couple of weeks for the dust to settle before cash withdrawals from ATMs become smooth as the ATMs are bound to run out of cash due to high demand and short supply of the notes.

Each ATM machine has only 3-4 cassettes that can hold cash in it to dispense. Each cassette has to be configured to dispense a particular value. So far, all ATMs were configured for Rs 100, Rs 500 and Rs 1,000 denomination notes. Official of a company (not FSS) that also manages the ATMs said:  “Every ATM has ‘cassettes’ which can hold a particular denomination. To be able to provide Rs 2,000 denomination notes, the cassettes have to be configured, which will take time.” His company is trying to configure one cassette for Rs 50 notes, the software for which is available with it unlike the Rs 2,000 cassettes to be designed and then configures.

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Comment (1)

  1. K SHESHU BABU

    The legal hurdles in calibration of ATMs may deepen the sufferings of the people who are already facing difficulties in transacting business on a daily basis for urgent needs. Alternative arrangements should be made to ease the difficulties.

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