According to the founder, chairman and MD of AGS Transact Technologies, Ravi Goyal, while digital transactions are growing rapidly, cash in circulation — which used to be Rs 18 lakh crore around the time of demonetisation — has gone up to Rs 29 lakh crore. This indicates that cash is also growing. “We plan to capture the growth in both these areas,” said Goyal.
Currently, there are around 40,000 cash-recycling machines — ATMs that allow customers to make deposits and use the same cash for withdrawals. These machines are being deployed by banks in their branches and, with customers getting accustomed to them, banks are looking at deploying them outside the branches as well.
The other reason why cash-recycling machines have not replaced all ATMs is that, currently, the big banks deploying ATMs are not part of any interoperability arrangement. What this means is that the network effect does not kick off as customers cannot use any bank’s machine deposits.
However, there is a strong push for these recyclers as the RBI has become more stringent with its cash-handling norms. Incidentally, AGS is also a provider of cash management services — both for in-house ATM management services and others. “We are 100% compliant with RBI’s cash management norms and we have been able to pass on the costs to the banks,” said Goyal.
Although the promoter is selling stake, the proceeds will be invested in the company by retiring expensive debt, which will help improve its bottom line. AGS Transact Technologies has filed the draft red herring prospectus for a Rs 800-crore IPO, comprising an offer-for-sale from the promoter Goyal. Although the shares are being sold by the promoter, the money will be used to retire company debt which will improve its bottom line, Goyal said.