Banks hit by AGS may turn to others for cash management operations

AGS is the second largest ATM servicing and cash management in the country with presence across 2,200 cities and towns

A few banks, whose ATM services have been impacted due to the liquidity issues of AGS Transact Technologies, are exploring the option of shifting their cash management operations to other providers. This would minimise customer inconvenience, said people in the know.

 

AGS Transact, which provides cash management services to 32,151 ATMs, with an average daily cash replenishment of Rs 1,933 crore, has defaulted on repayment obligations for certain outstanding borrowings of the company and its subsidiary Securevalue India Ltd (SVIL), due to liquidity issues.

 

“The company acknowledges stakeholder concerns regarding recent disclosures and their business and operational impact. The management is committed to implementing corrective measures to address it and restore confidence,” a company statement said.

 

Some major banks that are clients of AGS include ICICI Bank, YES Bank, Axis Bank, State Bank of India, Punjab National Bank, Federal Bank, Dhanlaxmi Bank, Utkarsh Small Finance Bank, and Bank of Maharashtra, among others.

 

YES Bank has communicated to its customers that some of its ATMs are unavailable, according to a notice on its website.

 

Several other banks have also seen their ATM services getting disrupted, including ICICI Bank, and Axis Bank.

 

Axis Bank, HDFC Bank, and YES Bank did not respond to queries from Business Standard.

 

Domestic rating agencies have downgraded the company’s long-term bank facilities to ‘D’. They cited delays by the company in servicing interest and debt obligations on term loans and bill discounting facility in December 2024 and January 2025, respectively.

 

“CRISIL Ratings believes that the liquidity of the company has sharply deteriorated over the past 2-3 months owing to delay in collection from receivables as AGS was not able to meet the service level agreements (SLAs) with its customers,” the rating agency said in its note.

 

Additionally, India Ratings said the company’s liquidity position is poor, as reflected by the inability to service debt on a timely basis. 

 

According to the rating agencies, Investec Bank Plc UK, State Bank of India, IDFC First Bank, Aditya Birla Finance, IndusInd Bank, Bandhan Bank, HDFC Bank, Federal Bank, Bajaj Finance and Dhanlaxmi Bank have exposure to the company.

 

Messages and phone calls to the company's communications team remained unanswered till going to press.