ME AND THE ATM

Aman

Parents can be really annoying at times. After Anya and I left home for college, Mom made this family WhatsApp group that has all four of us on it. Last night, when I was in the hostel canteen, my phone was pinging away all through dinner. I ignored the notifications till I got back to my dorm and then scrolled through the messages. Needless to say, I could have saved myself the trouble, for the whole group was busy making fun of me. It started pretty harmlessly but quickly plummeted into an Aman-bashing fest.

Anya

The bank sent me a new ATM card, and it’s pink!

Dad

So?

Anya

Pink!!! How sexist is that! They sent me a pink card because I’m a girl?

Mom

Maybe they just like pink.

Anya

I bet Aman didn’t get a pink card.

Mom

Speaking of Aman and ATM cards, when he was little, he thought ATMs printed money.

Anya

OMG, really?

Dad

He asked me for a remote-controlled car once.

And I told him I didn’t have any money.

So he said, ‘You can go to the ATM . . . and buy some more money.’

Mom

Lol

Anya

ROTFL

Mom

Cute.

Dad

I know.

Anya

He’s still cute . . . ish. Sometimes. Actually, scratch that.

Mom

Not cute. Bet he doesn’t bathe more than once a month.

Anya

Now that Mom isn’t nagging him any more.

I was very irritated when I read through those idiotic messages. I sent them one message and tossed my phone on to the bed.

I can't believe I thought this group was a good idea.

Even though we’re in different colleges in different cities now, Anya still manages to get under my skin. Every single day.

Back to ATMs. At one point, when I was quite little, I really did think that ATMs printed money specially for you. I still remember the day Dad was talking about. I desperately wanted a remote-controlled Ferrari mock-up. Dad had said it was expensive and that he would buy it for my birthday, which was six months away. That was their standard response. When parents don’t want to buy something for their children, they put it off till the next birthday. I kept nagging Dad for the car. That’s when he said, ‘I don’t have money to buy one now.’ Well, that’s a very mean thing to say to your kid, especially if you do have money, but I took him at face value. At the time, it bothered me that Dad didn’t have money. That evening, I walked up to him, looked him in the eye with my hands on my hips and said, ‘Why don’t you go and buy some from the ATM?’

‘What? he asked, surprised. ‘Buy some from the ATM? You think an ATM makes money?’

‘Whenever you go to the ATM, you get crisp, new notes. Aren’t they made at the ATM?’ From the expression on his face, I realized that he was a bit taken aback that I had thought ATMs baked fresh currency the way bakeries bake bread. But no one had explained this to me. Ever.

To Dad’s credit, he didn’t laugh. Instead, he put his arm around my shoulders and said, ‘To understand how an ATM works, you need to know how a bank works.’

I had been to a bank just once before and that was when Mom had gone in to do some work. We walked in, she talked to someone and we walked back out. All I remember from the visit was that I got two Cadbury Eclairs, which the lady behind the counter had given me. She had offered me a Pepsi too but Mom, without even asking me, turned it down. ‘Junk food is a strict no!’ she had said. I was angry for the rest of the morning.

That Saturday, Dad took me to a bank. I was happy that Mom didn’t come along.

The security guard smiled as we walked in. Almost everyone seemed to know Dad. He walked straight into a room that had ‘Manager’ written on it. It turned out that the branch manager, Nitin Uncle, had been a classmate of Dad’s when he did his MBA.

‘I brought him here for you to tell him everything about how banks work,’ Dad said the moment the introductions were through.

‘I should have known you would be incapable of saying anything intelligent yourself,’ Nitin Uncle teased. I was thrilled to bits. Finally, I had met someone who could pull my dad’s leg. No one that I knew ever managed to do that. Not even Mom. I took an instant liking to Nitin Uncle. Dad left me with him and promised to come back in an hour.

‘Do you know why people open bank accounts?’ Nitin Uncle asked me.

I shook my head.

‘People do it to keep their money safe. They can also take it out or put it back into the bank whenever they want. Just imagine keeping lots of money at home and thieves get to know of it. Isn’t it better to store it all in a bank, where we hold it in your name and keep it safe? Also, people who keep money in the bank earn some interest on it.’

‘Interest?’ At that point in time, these were all new terms to me. Nitin Uncle understood that I didn’t know much about banking.

‘You’ve understood the concept of safety, right?’ he asked. Without waiting for my answer, he went on, ‘Just imagine a world where everyone carries cash around. It would be so cumbersome.’ He walked me to the lobby. There were two men and two women sitting at separate desks, each talking to someone sitting across from them. I was told that they were customers of the bank. On one side of the room was a long counter, which was separated from the rest of the lobby by a high glass partition. There were three people sitting on the other side of the glass. ‘Those are cash handlers. We call them tellers,’ Nitin Uncle said. ‘They accept cash from people who come in to deposit their money, and pay out cash to people who want to withdraw from their account.’

We walked over to a side door, which was locked. It led to the area behind the partition, where the tellers sat. He knocked on the door a couple of times and waited till one of the tellers let us in. I saw five steel trunks on a table in the corner. Nitin Uncle pointed at them and breezily said, ‘You want to see what’s inside?’ He strolled up to one of them and unlocked it.

My mouth fell open. It was full of cash. ‘All these trunks are full of cash,’ Nitin Uncle said as he shut the trunk and walked back to me. ‘Imagine if people roamed around with so much cash!’ And, as expected, he continued, ‘They would get mugged. People would beat each other up and steal from them. Putting your money in a bank is an easy way of keeping your money safe. People open accounts with banks and deposit all the money they have in those accounts. Your money is then in the custody of the bank. You can even ask your employers to deposit money directly into those accounts. Business people too can open an account and transact, which means you can transfer money from your account into someone else’s and even receive money from other people into your account. These are called transactions.’

‘So Dad’s salary gets deposited into his account here?’ I asked him.

‘Yes, that’s right,’ Nitin Uncle nodded. ‘And even your mom’s business receipts get deposited in her account here.’

I was beginning to understand. ‘So both of them have accounts in your bank?’ I asked.

‘Yup, both of them. Different types of accounts though,’ he replied as he led me back to the bank’s lobby.

‘Individuals, like you, me or your dad, open what we call a savings account. Money in a savings account earns interest.’

Interest again? I thought, but decided to let that be. I was sure he would eventually explain it.

‘For businesses, we open an account called a current account. It is also called a checking account. Money kept in a current account does not get you any interest. The reason is that current accounts typically have a lot of transactions, because businesses that open current accounts end up paying a lot of people on a daily basis and also get lots of receipts. Your mother, for example, pays seventeen people their salaries through her account every month. Your father, on the other hand, does not have many transactions. So on a current account, we don’t pay any interest, but we charge on transactions if they go beyond a certain number.’

‘How do people transact on a bank account?’ I asked, and then hurriedly clarified, ‘Once money comes in, how do I take it out?’

‘Someone’s getting curious!’ Nitin Uncle laughed, as a peon brought in a bottle of Pepsi. I grabbed it immediately. ‘You can access your account either by walking into a branch and going to one of the counters,’ he said as he pointed to the tellers, ‘or by using an ATM or calling our customer service helpline.’ He paused and took a deep breath. ‘And you know what—for tech-savvy youngsters like you, we also have a mobile app.’

He waited for me to take a gulp of my Pepsi and, I assume, digest what he had said. ‘See, most people use their bank accounts to pay others. If you have to pay them in cash, you can walk into any branch, give the person at the cash counter a cheque and withdraw money from your account.’ He walked to one of the counters and picked up a piece of paper.

‘This is a cheque,’ he said as handed it over to me. It was the same sort of rectangular sheet of paper that I had often seen Dad write on. ‘When a bank receives a filled-in cheque signed by you, it takes it as your instruction to pay a certain amount to the person whose name is mentioned on the first line.’ I looked at the cheque and saw that the first line said ‘Pay’.

Nitin Uncle continued, ‘When you have to pay someone, you take a blank cheque issued by the bank, write the name of the person you want to pay, write the amount in both numerals and words and then sign the cheque. The bank will have your signature in their records. They will match the signature on the cheque with their records, and if the two signatures match, they will give cash to the person who comes in with their name on the cheque. If you want to withdraw cash yourself, you just write “Self” on the cheque against the payee name.

‘If you have to pay Anya but do not want to pay her in cash, you can issue a cheque in her name. She can then deposit the cheque in her bank. Anya’s bank will collect the money from your account and deposit it into her account. Cheques are an easy way of paying someone.’

‘So I need a cheque if I have to pay Anya some money?’

A cheque allows you to pay people money without having to give them cash. Banks issue cheque books to their customers. Usually, each cheque book has the customer’s name, the account number, the name of the bank and the branch that the account is in. When the customer writes out a cheque to someone and signs it, the other person accepts it in place of cash. The other person can either go to the bank and withdraw the money across the counter or they can deposit the cheque in their bank account. If the customer writes ‘Account payee’ across the top-left corner of the cheque, it’s called a crossed cheque, and the money will only be paid into the account of the person whose name is written on the cheque. Crossed cheques are safer than uncrossed or bearer cheques. If a bearer cheque is lost, anyone can fraudulently use it to withdraw money.

‘Not always. There are other means too. If you know the details of Anya’s account, like her account number—most banks have complicated but unique account numbers—you can also log in to the app on your mobile, or even go to the website of your bank and log in to your account. From there, you can transfer directly into Anya’s account. But as I said, to do that you need to have her account details. Transferring money to each other and transacting is easier through an app or through the bank’s website. It saves you lot of time and effort that you would otherwise spend in going to the branch. In fact, these days you don’t need to go to a bank branch unless you have an urgent query or a pressing transaction to conduct. Your father, for example, has walked into this branch today after six months. Earlier, people would have to go to a bank for cash transactions. But nowadays, even that has stopped. ATMs are so convenient for basic transactions like withdrawing cash.’

‘Oh!’ I exclaimed.

‘What happened?’

‘So you mean to say that the money Dad withdraws from the ATM is his own money?’

Nitin Uncle burst out laughing. ‘What did you think? The ATM gives you money for free?’

John Shepherd-Barron was buying chocolates from a vending machine when he had a wonderful thought. If machines could give out chocolates, why not money? He designed the first ATM, which was situated in London. To take out money from that ATM, customers had to write down the amount they wanted on a specially designed slip of paper, which many say was radioactive, and insert it into the machine, which would then dispense the cash. So the ATM on your street corner is nothing but an improved version of a chocolate-dispensing machine!

I started blushing. That’s exactly what I had thought.

‘Every ATM is connected to the banking system either directly—if it is an ATM installed by your bank—or through a payment processing company, like Visa or MasterCard. Remember those ads that you see on TV: “For everything else, there’s MasterCard”?

Credit cards made their first appearance in 1949. Frank McNamara, an American businessman, went to a restaurant one evening and, after a hearty meal, found that he had forgotten his wallet at home. Though his wife paid their bill, the situation left him embarrassed and got him thinking. To prevent others from facing this problem, he created the Diners Club. Whenever Diners Club members would go to a restaurant, they would show the management their Diners Club card. The restaurant would then bill the club, and the club would bill the member. Thus was born the concept of payment through a card, which carries forward till date through the credit card.

‘So, if you go to an ATM and insert your ATM card into the machine, the ATM recognizes whom the card belongs to by reading the card number and the data coded on the black magnetic strip at the back. Each ATM card has a password—a personal identification number or PIN. Once you put the ATM card into the machine, it will ask for your PIN. If you key in the correct PIN, the ATM will prompt you to make a transaction. Most people withdraw cash from an ATM, though you can also do some other basic transactions. Once you tell the ATM that you want to withdraw cash, it electronically checks with the bank that you have sufficient money in your account. So it makes sure that you are not trying to withdraw Rs 10,000 when you have only Rs 3000 in your account. Once your bank gives clearance, the ATM counts out the correct number of notes of different values and gives them to you. It also debits your bank account for the same amount. If you don’t have enough money in your account, it rejects your transaction.’

‘Oh, now I understand. When Dad withdraws cash from an ATM, it’s his own money that he is taking out from your bank,’ I said sheepishly. ‘And I always used to wonder where the money came from.’

Nitin Uncle chuckled.

‘Where does the money in the ATM come from? Does it print its own notes? How is it that money in the ATM never gets over?’ I queried.

‘Oh, it does get over. Very often, in fact,’ Nitin Uncle said as he looked at the lobby of the ATM, which was right outside the bank. Seeing some activity there, he announced, ‘Come, let’s go. You have come at the right time.’

Both of us walked into the ATM kiosk. A few men were tinkering with the machines, and Nitin Uncle explained that they were engineers. The ATMs were then opened up. Nitin Uncle walked up to one and called me closer.

As I walked towards the ATM, I saw that the inside of it was like a chest of drawers. As if reading my mind, he said, ‘This isn’t a cabinet with shelves. These are called cassettes. At regular intervals, money is filled into these cassettes. When you see these large armoured vans parked outside an ATM, you can be sure that they are loading money into it. Every ATM across the country is loaded with cash either daily or every alternate day, depending on where it’s located. If it is used very frequently, cash is replenished daily.’

‘But then how is it that every time Dad withdraws money from an ATM he comes back with fresh notes?’ I quizzed him.

‘That is because more often than not ATMs are loaded with new currency. It makes it easier for the machine to count and give out cash. Old currency tends to get stuck in the ATM. And if cash gets stuck, we need to shut the machine down till an engineer repairs it. So it is more practical to stuff the ATMs with new notes and distribute old notes from bank branches.’

I was very excited that I had seen the inside of an ATM, and pointed my phone at it.

‘What are you doing?’ Nitin Uncle asked, looking puzzled.

‘Snapchatting it,’ I responded. I don’t know what was so amusing, but Uncle started guffawing. He began to walk back towards the lobby and I hurriedly followed him, after taking enough pictures and videos, of course. It gave me major bragging rights. And I wasn’t going to let go of the opportunity.

Back in the lobby, Nitin Uncle was busy talking to one of the other employees. ‘You want to see something?’ he asked.

I was all set to spend the whole day at the bank, so I enthusiastically nodded.

He led me to the far end of the lobby, from where a narrow staircase led down to the basement. We were followed by another bank officer. When we reached the basement, Uncle opened a register, wrote something in it and walked into a large room, the door to which looked like the type vaults have. You know, like the ones they show in the movies: large safes that have those huge iron doors. The room was filled with roof-high cabinets, all with several small lockers. They looked like miniature versions of the ones our seniors in school had.

‘These are the lockers we offer our clients. I know they look like the ones you have in school, but these are used to store things that are even more precious than school bags—your valuables,’ Nitin Uncle said.

I glanced around the room and saw that there were hundreds of these lockers, all laid out in an organized way. They were also numbered.

‘These days, robberies have become so common that no one wants to keep valuables at home. Customers bring in their prized possessions and keep them in these bank lockers. Gold, jewellery, important property documents, stuff people are sentimental about . . . they keep all kinds of stuff. And we rent out these lockers to customers for a fee and make money,’ Nitin Uncle said. ‘Each locker has two keys. One is with the bank and the other with the client. Only if both the keys are put into the keyhole will the locker open. This makes sure that we cannot open a customer’s locker and take anything away.’

He strolled ahead, pointed at the huge safe door and said, ‘This is locked at night. Also, we have round-the-clock security. You’d have to be foolish to think of robbing a bank. And if you do have those aspirations, you’d have to get past the main security, then break into this vault door and then break into the individual lockers, all without setting off the alarms in the building. It would really take something, my friend,’ he laughed. ‘In essence, valuables kept in these lockers are as safe as they can be.’

‘Mom has a locker here, doesn’t she?’ I asked.

‘That one,’ he said, pointing to a specific locker a few feet away from us. ‘That is your mother’s locker.’

‘So Dad and Mom are good customers of the bank?’ The moment the words left my mouth, I wondered why I had asked.

‘Well, quite decent, I must say. They have a savings account for your dad, current account for your mom and a locker for the whole family. They also have a few fixed deposits with us.’

‘Deposits?’

‘Remember I told you about interest?’

Finally, he was going to explain it to me.

‘A bank gives money to people who need money,’ he continued. ‘It is called a loan. In return for the bank giving them money, the customers pay back the loan amount and an additional amount over and above the loan amount. This is called the interest that the bank charges on the loan. The money that people keep with the bank can also be seen as money that customers have loaned to the bank. The bank pays the customers interest on money that they keep with the bank. The interest that the bank pays the customers on deposits is less than the interest they charge loan customers—those who have borrowed from the bank. The difference between these two amounts is what the bank makes as its own profits.

‘For example, if someone puts Rs 100 in a savings account, the bank would give him an interest of 4 per cent on it, which would be Rs 4. In turn, the bank would lend out that Rs 100 to customers at a rate of 14 per cent. So it would make Rs 14 in the process. It earns Rs 14 from loan customers and pays only Rs 4 to deposit customers. There would be a clear profit of Rs 10. This is how, simply put, a bank makes money.’ I loved the way Nitin Uncle explained these banking transactions to me.

‘If customers have money that they don’t need for a long period of time, they take it out of the current or savings account and put it into a fixed deposit with the bank. Banks pay a high interest on fixed deposits as compared to savings accounts, but they do not let you withdraw the money the way you can withdraw money from a savings or current account. You can’t take the money out until the term of the deposit is over, which is when a deposit matures. You can make fixed deposits for terms as short as fifteen days, all the way up to several years. And if, for any reason, you do need your money back before the deposit matures, you will pay a penalty, so the interest you earn is a lot less.’

Banking was not as complex as I had thought it would be.

As we headed back to Uncle’s room, he asked, ‘Do you want to open a bank account, Aman?’

‘Me?’ My eyes almost popped out. ‘I can open an account? Am I not too young?’

‘Age is no bar to open an account. Anyone can do it. There are different types of accounts for different kinds of people. As I told you earlier, individuals can open savings accounts and companies can open current accounts. Minors like you can open something called a savings account for minors. The only difference between a minor savings account and a normal savings account is that the minor account needs a guardian to also be a joint account holder. Typically, we take a parent on as a joint account holder.’

‘Joint account holder?’ I asked. Too many unknown terms were being launched at me.

Nitin Uncle rolled his eyes. ‘You ask too many questions, Aman!’

I hastened to apologize. ‘Sorry, sorry!’

‘No, I’m joking. It’s good to be inquisitive. When individuals first open an account, it helps to have a joint account. Any account which has more than one account holder is called a joint account. For example, your mom and dad have a joint account here. Normally, married couples and parents and children own and operate accounts jointly. It also simplifies operations because either of the joint account holders can make transactions. But tell me, do you want to open an account or not?’

‘Of course I want to!’ I exclaimed quickly lest he withdrew the offer. Not one of my friends had mentioned that they had an account in a bank. I would most likely be the first one, and that was giving me a huge kick.

Nitin Uncle led me to one of the tables in the lobby of the bank. He kept referring to the lobby as a front office. It made me believe that there was something called a back office too, but I didn’t ask him about that. I wanted him to get my account opened first.

‘Give me a minor account opening form,’ he requested of the person sitting at one of the front office desks. In no time, he pulled out a form from his drawer and handed it over.

‘Come, sit,’ Uncle said as he patted the chair next to him. The form asked for all kinds of details, including my full name, my father's name, my address and similar details for my guardian too. Though I could have filled in my mother’s details, Nitin Uncle suggested that I give my dad’s, as he would be able to sign the forms when he came to pick me up from the bank.

‘Would you happen to know if you have a passport?’

‘Yes, I do have one,’ I responded. We had travelled to the Maldives the year before, and Mom had carried my passport for me.

‘We’ll need a copy of it. I’ll ask your dad to email it to me.’

‘But why my passport?’

Nitin Uncle explained, ‘We normally take four key documents from a customer, apart from this filled-in account opening form. A photograph, some sort of proof of your identity and address, and a copy of your PAN card.’

This was the first time I was hearing some of these terms.

Nitin Uncle must have known, because he went on, ‘Your identity proof and address proof are KYC documents. KYC as in Know Your Customer. Given that we deal with money, we have to be very careful that anyone who opens an account is, in fact, a bona fide account holder. We have to make sure that the person is who they say they are, and stays where they say they do. This is to prevent fraud. For example, if your sister, Anya, commits fraud and gets lots of money illegally, and she opens an account in your name and puts the money into that account, what will happen?’

‘I will get all the money that is hers,’ I replied, not knowing any better.

‘Yes, provided she leaves it there. She might then fraudulently withdraw the money and scoot. Tomorrow, if the cops get suspicious and see that the money was routed through your account, they will think you were involved.’

‘Oops. I didn’t think of that.’

‘Exactly. That’s why we have to be so careful about who opens an account. The PAN—Permanent Account Number—is the number through which grown-ups pay their taxes. It is unique to every individual. The government wants to keep track of the money that is routed through your account, and also see if the income you pay tax on is in line with the transactions in your account. That’s why we ask for a PAN card too. Your passport will serve as your identity proof and address proof, since it has your address and your photo. An Aadhaar card also serves the same purpose.’

One of the bank employees had brought out a camera, so I stood against a wall while he clicked a few photographs. I insisted on seeing them when he was done. I didn’t want a horrible photograph to make its way to my bank account. (Sadly, the photo in my passport is one of my most terrible yet.)

‘Come on, Aman. Give them a break!’ It was Dad. He had returned and had been a witness to my tantrums. Nitin Uncle stepped in and distracted him, thankfully.

Dad had a copy of our passports and his PAN card on his iPhone. He always keeps them there, just in case of an emergency. He transferred them to the bank officer’s phone, who printed out copies that we signed (which is called self-attestation, apparently). They had us do this to make sure that we don’t dispute the fact that we had submitted these copies. How complicated adults make a simple thing like opening a bank account!

But after this we were done. The officer opened the bank account. He got Dad to sign a transfer instruction, which allowed the transfer of money from his account to my minor account. They needed a minimum amount of money to be in the account in order to keep it operational.

‘The chequebook and your statements will come to your home address, sir,’ the bank officer told my dad.

I said bye to Nitin Uncle and thanked him for everything. When I strode out, I felt particularly proud. I had a bank account of my own before Anya. It gave me one up on her. At least till she opened hers.

As we got into the car, I asked Dad one last question about my bank account.

‘What’s a statement, Dad?’

Dad smiled at me, ruffling my hair. He nodded but didn’t say anything right away. I knew what to expect. He would launch into another long explanation sooner or later.

MONEY MATTERS

Exercise 1

Visit a neighbourhood bank with your parents and open a minor bank account in your name. Write down the name of the bank and your account number.

Exercise 2

On your visit to the bank, write down the services the bank offers its customers.