The RBI has asked all banks to disable the cash retraction facility that is a feature in all ATMs. This facility ensures that if a customer forgets to collect his cash and leaves the ATM, then the machine will suck the currency notes back in and credit the appropriate amount back into the customer's account. However, the RBI has noted that banks were reporting a number of instances where this feature was being abused by frauds:
During the past one year, banks had reported several instances of fraud pertaining to cash retraction. The modus operandi is to forcibly hold on to a few pieces of notes in ATM machines that have cash retraction system, while allowing one or two pieces of notes to be retracted and then claiming nonreceipt of cash. Since retracted transactions are credited back to the customer’s account, the balance in the fraudster’s account remains unaffected even after collecting bulk of the delivered cash. Presently, ATMs do not have the capability to count the pieces of retracted notes.
The Financial Express is one of a number of papers carrying this story.