Priyanka Tiwari
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The Reserve Bank of India (RBI) has scheduled a meeting with banks this week to address concerns over untraceable cash handled by AGS Transact Technologies, a company responsible for loading cash into ATMs. The main agenda is to evaluate the extent of cash that cannot be traced, some of which banks have reported since mid-January, when AGS’s issues first became public.
Although no official estimate is available, banks using AGS’s services suggest the amount of untraceable cash could be as high as Rs 1,000-1,500 crore. Despite multiple inquiries, emails sent to the RBI seeking clarification on the matter have gone unanswered.
AGS Transact Responds to Allegations
AGS Transact Technologies has strongly denied allegations of unaccounted funds and misappropriation, emphasizing that they are in the process of reconciling the cash across their ATMs and vaults. A spokesperson for the company stated, “We are handing over the reconciled cash to the respective banks as per industry procedures.”
Cash Handling Vulnerabilities
Although the cash loaded into ATM cassettes is secure and cannot be accessed by outsiders, concerns have been raised about the potential mishandling of cash during its transfer from AGS Transact’s vaults to ATMs. According to sources, the new regulation on cassette swaps, which was supposed to be implemented last year, has yet to be adopted by less than 40% of ATMs.
This new regulation mandates a two-factor authentication system involving the bank during the cash-handling process, reducing human intervention and making it harder for mishandling to occur. However, the adoption of this regulation has been delayed due to unresolved discussions on who will bear the cost of implementing these changes.
Impact on ATM Services
Reports indicate that approximately 30,000-35,000 ATMs, primarily managed by AGS Transact, have not been adequately stocked with cash since February. AGS Transact serves around 16 major banks, including State Bank of India, HDFC Bank, ICICI Bank, Bank of India, Union Bank of India, and Axis Bank.
Due to ongoing issues, both SBI and ICICI Bank have stopped using AGS Transact’s services. Banks are now in the process of migrating to new service providers, including CMS Info Systems and Hitachi.
RBI Meeting and the Future of AGS Transact
The upcoming meeting with the RBI will focus on addressing the ongoing migration process and discussing ways to recover the untraceable cash. Additionally, AGS Transact is facing insolvency proceedings initiated by Maxwell Aircon, which is an operational creditor, with unpaid dues of Rs 38 crore.
With the company’s future uncertain, urgent measures are needed to resolve the ongoing issues with empty ATMs and ensure smooth cash handling operations across the banking sector.
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