RBI to Review Cash Handling Discrepancies at AGS Transact Amid Missing Funds Concerns

Central Bank Calls Urgent Meeting with Banks Over Untraceable ₹1,000-1,500 Crore ATM Cash

Mumbai, March 18, 2025: The Reserve Bank of India (RBI) has summoned a high-level meeting with leading banks this week to address concerns over unaccounted cash handled by AGS Transact Technologies, a major ATM cash management service provider.

The move comes after several banks reported discrepancies in cash reconciliation, with estimates suggesting that between ₹1,000-1,500 crore remains untraceable since mid-January 2025. Sources indicate that the central bank aims to assess the extent of the issue, monitor cash recovery efforts, and discuss contingency plans for banks still dependent on AGS Transact’s services.

AGS Transact Under Scrutiny as Banks Struggle to Trace ATM Funds

AGS Transact Technologies, one of India’s largest ATM cash logistics firms, is responsible for loading cash into thousands of ATMs across the country. However, reports have surfaced that several banks have been unable to account for significant portions of cash that AGS was entrusted to handle.

The crisis has led to a shortage of cash in ATMs, affecting banking operations and consumer transactions. Many banks have already initiated transitions to alternative service providers to mitigate the risks associated with AGS Transact’s ongoing issues.

AGS Transact Refutes Allegations of Cash Mismanagement

Despite mounting concerns, AGS Transact has denied allegations of misappropriation or mishandling of funds. A spokesperson for the company stated:

“The company strongly refutes these unfounded allegations of unaccounted funds and misappropriation. We are in the process of reconciling cash across our ATMs and vaults and handing it over to the respective banks in line with established industry procedures.”

However, banking industry insiders suggest that several systemic vulnerabilities in ATM cash handling procedures may have contributed to the discrepancies.

Issues Leading to Unaccounted ATM Cash

1. Delays in Implementing Secure ATM Cassette Swaps

• The RBI had mandated the adoption of cassette swap technology to minimize manual cash handling and improve security.
• The new system requires a two-factor authentication process, ensuring that only authorized personnel can access ATM cash cassettes.
• However, less than 40% of ATMs have implemented this mechanism, making cash vulnerable to mismanagement during transfers.
• A senior banker attending the RBI meeting stated:
  “Banks are yet to adopt new norms on cassette swaps. The contentious issue is who will bear the incremental cost of cassette swaps. With no decision on this, cash handling in ATM operations is still vulnerable to human interference.”

2. ATM Cash Shortages Disrupting Consumer Transactions

• Reports indicate that 30,000-35,000 ATMs serviced by AGS Transact have been inadequately stocked since February 2025.
• This has led to cash shortages across several banking networks, affecting consumers and raising serious operational concerns.
• Many banks are now seeking alternative ATM cash management service providers to prevent further disruptions.

3. Major Banks Cutting Ties with AGS Transact Amid Crisis

AGS Transact has provided cash logistics services to at least 16 leading banks, including:

• State Bank of India (SBI)
• HDFC Bank
• ICICI Bank
• Bank of India
• Union Bank of India
• Axis Bank

However, several banks have already started transitioning to new service providers.

• SBI and ICICI Bank have reportedly stopped using AGS Transact’s services altogether.
• Other banks are migrating to alternative ATM cash handling firms, such as:
  • CMS Info Systems
  • Hitachi Payment Services

A source close to the matter said:
“Many banks are still in the process of migration to CMS Info Systems or Hitachi. However, due to the scale of AGS Transact’s operations, a complete transition will take time.”

RBI Meeting to Address Untraceable Cash and ATM Management Challenges

The RBI’s upcoming meeting aims to:

• Review banks’ progress in transitioning away from AGS Transact to new cash logistics providers.
• Assess the scale of missing cash discrepancies and determine if untraceable funds can be recovered and accounted for.
• Ensure banks have alternative measures in place to prevent ATM cash shortages and operational disruptions.

AGS Transact Faces Financial Uncertainty as Insolvency Proceedings Begin

Adding to its troubles, AGS Transact now faces insolvency proceedings initiated by Maxwell Aircon, an operational creditor, due to unpaid dues amounting to ₹38 crore.

Legal experts indicate that if AGS Transact is declared insolvent, banks may face longer delays in recovering funds, increasing their reliance on regulatory intervention from the RBI.

As the banking sector braces for the fallout, the RBI’s response to this crisis will be critical in restoring confidence in ATM cash management operations across the country.