From 01 January 2020 SBI customers will require an OTP to perform Cash Withdrawals above Rs 10,000 at SBI ATMs: National Financial Switch (NFS) Infrastructure and Design being inadequate, may allow other ATMs to still dispense cash without OTP

State Bank of India (SBI) customer are advised to carry their mobile/smartphone, for cash withdrawal at ATMs, as they will receive an OTP on the Registered Mobile Number (RMN), to perform a cash withdrawals of over Rs.10,000/-.

The Salient Facts of this new procedure:

• This new process is only available for SBI Debit Card Holders.
• The Registered Mobile Number (RMN) should be a valid one.
• The OTP will be a system-generated numeric string of characters that authenticates the user for a single transaction.
• The consumer will be required to input the OTP when prompted by the ATM.
• The OTP will only be made available for withdrawal of Rs.10,000/- or more.
• The OTP will be made available only if the transaction is done on an SBI ATM and not on other Bank ATMs.
• This OTP prompt will be available on withdrawal between 8:00 PM to 8:00 AM.
• The use of “Off-line” OTP Pin generated based on “SBI Off-Line PIN Generator App” is also allowed (the same has not been clarified by the Bank).

The Benefits of this OTP based ATM Withdrawal Procedure:

• Addition of another factor of authentication.
• Customer made aware that a cash withdrawal has been initiated prior to the actual withdrawal.
• Avoid losses to customer due to Loss of Card or Theft of Card.
• The location of ATM or the Debit Card is visible if transaction is initiated on unauthorised basis or if the card is used by a thief.
• Safeguard the customers against the risk of unauthorised transactions on account of skimmed/cloned cards.
• Losses if any due to unauthorised withdrawal is limited to Rs.10,000/- only.
• Minimize the number of unauthorized transactions.

Is the National Financial Switch (NFS) ready for the new feature of additional OTP validation on ATM withdrawals, introduced by State Bank of India (SBI)

The New feature related to the provision of OTP for cash withdrawal by SBI Debit Card holders is only limited to any withdrawal that is initiated at the SBI ATM for a withdrawal of Rs.10,000/- or more. Further this is only available between 8:00 PM to 8:00 AM. However, this feature will not be available if the customer withdrawals take place from ‘other than SBI ATM’; amount less than Rs.10,000/-; and no OTP is required after 8:00 AM and upto 8:00 PM.

Assuming that this new initiative is a prelude to the actual rolling-over to other Bank Consumers and also across all Bank ATM; then the feature is a success. Presently, this new feature is an exclusive SBI Application augmentation, and this feature is not applicable if withdrawal is done from other Bank ATMs and not done between 8:00 PM to 8:00 AM.

The ATMs in India is regulated by Reserve Bank of India (RBI), the RBI also facilities the ‘Inter-Bank’ connectivity. The ‘RBI facilitated’ National Payments Corporation of India (NPCI) is the sole operator for various retail payments systems such as National Financial Switch (NFS), Immediate Payment Service (IMPS) and Unified Payments Interface (UPI), among others. Most of the ATM linkages in India is done through the NFS, which allows the Bank ATM to link it to its own Customer Database as well as to the ‘Other Banks’ Database (If the customer is using the ATM form a Bank other than one provided by the Bank). The NPCI today has over 100 banks (including scheduled and cooperative banks) that operate through the NFS network as direct members. NFS is the largest inter-operable ATM network in the country and it manages more than 95 per cent of the domestic inter-bank ATM transactions.

The gaps as noticed in this new procedure are many, due to the fact that the required infrastructure has not been built into the National Financial Switch (NFS). Also that the Banks other than SBI need to incorporate the Software Application change and then configure the ATMs to accept the OTP input.