The demonetisation of notes has been the talking point for everybody in the past two weeks. Long queues outside banks and ATMs have been common, with many people being put through inconvenience. Opposition parties have blamed the government for mismanaging the whole process and for bringing financial chaos through this move.
The process of demonetisation involves the recalibration of ATMs all across the country since the size of the newly introduced Rs 2000 note is different from that of the notes currently in circulation. There are about two lakh ATMs in India which need to be recalibrated.
In the wake of this, we decided to talk to V Balasubramanian, President- Transaction Processing & ATM Services, Financial Software and Systems (FSS), to get a better picture of the recalibration exercise. FSS, headquartered in Chennai, is a worldwide leader in payments technology and transaction processing.
Here are excerpts from the interview:
What does recalibration mean? Why do we need to recalibrate the machines? Is it because of the size of the notes varying from the old ones?
Recalibration is a process, where the cassettes that hold cash in the ATMs are modified to suit the size of the currency. Should there be a change in the size of the currency then the cassettes that hold currencies have to be modified / calibrated to suit the new size.
Generally ATMs in the country come with a fixed number of cassettes – either two or four and each cassette is calibrated to hold specific denominations. In case of four cassettes, one cassette is configured for Rs. 1000, two for Rs. 500 and one for Rs. 100.
With demonetisation, both denominations and the sizes of the currencies have been changed, so these cassettes are now being calibrated to dispense Rs. 100 notes and the new Rs. 500 and Rs. 2000 notes.
Would you like to comment on why the government changed the size of the notes, because if they had kept it the same, they could have avoided this entire recalibration exercise and saved time?
The size of the currency is changed as per international standards and also with the focus of cutting down the print and production costs. Government has also taken this step and introduced many new security features in the new currency to avoid printing of fake notes.
How long does it take to recalibrate one ATM machine?
The actual calibration work needs denomination change and size change which can take between 30 – 60 minutes if all stakeholders are present.
How many machines do you manage and how long do you expect the entire process to take for all the machines you manage?
FSS manages 40,000 ATMs across the country. With this new development, we had recalibrated and tested all ATMs managed by us to dispense Rs. 100 notes on November 11. Once Rs. 2,000 was released, we calibrated the ATMs to dispense them. The government has released the size of the Rs. 500 notes and we are currently in the process of recalibrating the ATMs to dispense them as soon as it is released. We expect the entire process to be completed within a week to 10 days.
Are there enough engineers/technicians to recalibrate the machines? Is this job done in-house or is it sub-contracted to a third party?
Recalibration of ATMs is a team effort involving banks, ATM manufacturers, managers and cash management and logistics companies. And the whole industry has come together to tackle this emergency.
A war room has been created where teams from the ATM manufacturers, cash agencies and the managed service providers like FSS have come together to plan for ATM recalibration, logistics and cash management and a common pool of engineers has been deployed in the field to handle this situation. This team is working round the clock to ensure that all 220,000 ATMs across the country are recalibrated at the earliest.
This job is being handled by ATM manufacturers and managers and is not sub-contracted to third parties.
Has the Govt or RBI instructed companies like yours with regard to recalibration? There have been rumours doing the rounds saying it will take 30 mins per ATM instead of four hours.
Yes, RBI has given clear instructions to Banks and they have in turn instructed us.
Regarding the time taken for recalibration, it can take 30 – 60 minutes, but the logistics of gathering the teams and moving from one ATM site to another and completing the task takes time. A route in a day covers around 20 ATMs.
Lastly, do you think that demonetisation of notes is a good move and will help curb corruption / prevent the circulation of black money?
This is a good move from my perspective as cash deposits in the Banks have seen significant surge. This will bring good dividends to our economy and will have a deep and positive overall impact. However, it is too early to comment on abolition of black money, as this is a just a first step and we have a long way to go. But this first step by the government is definitely in the right direction.