ATMs are a pretty reliable way to get cash in India, though they tend to be out of order more often than in the West—or out of money. One evening I went to seven different ATMs trying to get cash but every single one of them (which was nearly ever ATM in town) was either out of order or out of cash.
One thing you have to be careful of is that the ATMs in India seem to be considerably faster at snatching back the money or your card if you don’t take it from the machine immediately. The other day I was with a friend who was withdrawing money. He had grabbed a handful, not realizing that he didn’t get it all. I saw it and made a grab, but only got a few hundred more rupees before it got sucked back into the machine. I think the money didn’t all come out straight, but got a little messed up. Anyway, we went into the bank and gave the details and the manager said that if the money was found to be short, it would be sent to my friend. Another friend had something similar happen, but that bank refused to do anything about it. It’s a safe assumption that the manager there planned to pocket the money himself. Don’t accept such a song and dance, at least if it’s enough money to be worth the effort. Saying that you’ll file a complaint with the head office may have some effect.
Another thing that happens once in a while is that a particular ATM may not give you the full amount. For this reason, you should always count the money immediately. In case of a problem, inform the guard and/or call the bank immediately. I got shortchanged by a few thousand rupees once, which I wasn’t able to collect. Usually, they will be a bit more helpful.
All the usual ATM scams of the West can also be found in India, though they are most common in the big cities. In some places, there have been reports of thieves rigging the ATMs to trap your card, so if the machine eats your card, try not to leave until a bank official comes to retrieve it for you. Of course, if it’s night or a weekend, etc., you can’t do that, but at least stick around until someone else tries to use the machine. The usual MO is for the thief to come in pretending to be a helpful bystander or just someone wanting to get some money from his account, so you need to keep an eye on what’s he’s doing. This will only happen at ATMs that don’t have guards—unless the guard himself is part of the scam.
Make a point of always being careful with your card and pin and you should avoid most problems. If you are going to a fairly remote location, take enough rupees in case there isn’t a functioning ATM (or bank that will change your money) in the vicinity. In parts of the Himalayas, it’s possible to find yourself several hours or even a day’s journey from the nearest one.