Unpaid salaries, defaulted dues: How a cash crunch at AGS hit banks’ ATM ops

According to a person aware of the development, banks including ICICI Bank, Axis Bank and Yes Bank are among lenders which have seen some cash dispensers shut. A notice on Yes Bank’s website said some of its ATMs were currently unavailable, directing customers to a branch or another ATM.

The person cited above said AGS staffers managing these machines shut them down after their salary dues piled up. Put together, the three banks have over 32,000 ATMs and cash recyclers, as per RBI data, although it could not be immediately ascertained as to how many of these are managed by AGS. The company had 32,151 ATMs and cash recyclers at the end of September.

“We have recently come across instances of aggrieved contractors/employees of an ATM service provider, which is a leader in the industry, disrupting operations at ATMs of their clients, including us,” a spokesperson for ICICI Bank said. The bank is advising customers to use ICICI Bank’s nearby branches or ATMs to ensure their convenience. “Alongside, we have initiated the process of transferring the management of the ATMs from the current service provider to other providers,” the spokesperson said.

While an email sent to Yes Bank remained unanswered, a spokesperson for Axis Bank declined to comment. AGS too did not respond to an email seeking comments on the story.

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Financial troubles

Founded in 2002, AGS Transact has three business segments: payment solutions, banking automation solutions; and other automation solutions meant for customers in retail and petroleum. As per information available on its website, the company and its subsidiaries had an employee base of over 9,000—including sub-contracted staff—as of 30 September. The company and its subsidiary Securevalue India had a debt of ₹726.3 crore as on 7 February, as per AGS’ disclosures.

AGM Transact earns fees from banks for managing ATMs. While 67% of its ATMs and cash recyclers earn a fixed monthly fee from banks, the rest have a transaction-based fee arrangement.

AGS Transact informed the exchanges on 4 and 5 February about credit rating downgrades by Crisil and India Ratings, followed by a detailed disclosure on its default on 10 February. The disclosure said AGS and Securevalue had defaulted on loan repayments of ₹71.6 crore. It, along with its two subsidiaries (India Transact Services Ltd and Securevalue India), also owed employees, consultants and contract workers ₹66.9 crore as on 31 January.

Operational and customer impact

Following the default, rating agencies Crisil and India Ratings downgraded the company’s bank loans on 3 and 4 February, respectively. The Crisil note said the company did not yet disclose any instance of delay or default on its borrowings to the stock exchanges. “The company had also misrepresented facts stating that they have adequate means to support upcoming debt obligations for December 2024 in its no default statement submitted in November 2024,” Crisil said.

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According to India Ratings and Research, the downgrade reflects a delay in AGS Transact’s debt servicing on a bill discounting facility and a term loan in the past two months, as confirmed and informed by the lenders on 4 February.

India Ratings said that AGS’ liquidity was “hugely impacted by a stretch in its receivable days caused by the holdback of payments by its customers due to non-payment of statutory dues and non-adherence to service level agreements.” As per the management, the company intends to aid liquidity by improving its collection cycle and fund infusion by the ultimate promoter through the issuance of share warrants, the rating agency said.

AGS Transact is led by Ravi Goyal, its founder, chairman and managing director who owns a 21.67% stake. The total promoter group holdings stand at 60.11% as on 31 December.

The problem seems to have impacted not just users of these cash dispensers but also owners of properties rented out for ATMs. Social media platform X (formerly Twitter) is littered with complaints of people alleging they have pending payments from ATMs rented out and run by AGS Transact.

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Mohit Malik, a 45-year-old information technology professional from Gurugram, told Mint that he has not received rent for nine months, with electricity bills pending for about a year, forcing the authorities to disconnect power. This particular ATM is in Yamuna Nagar, Haryana, he said. “The challenge is that my contract with the company ended in December and now I do not know when the dues will be cleared,” said Malik.