A few private sector banks have started levying heavy charges on cash transactions. The move comes four months after Prime Minister Modi's demonestisation drive which has pushed the nation at the cusp of a digital revolution.
These charges can go up to Rs 150 depending on the number of transactions made in a single month. The exorbitant charges on cash transactions will deter people from pursuing cash transactions. So far, PSU banks have not applied such high taxes on cash transactions but the government did put a cap of Rs 3 lakh on transactions done in cash.
Banks including HDFC Bank, ICICI Bank and Axis Bank began charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.
The charges would apply to savings as well as salary accounts effective from today, leading private sector player HDFC Bank said in a circular.
The bank would also cap the third party cash transactions at Rs 25,000 per day, while cash handling charges would be withdrawn effective today, the circular added.
The move was seen in some quarters as aimed at discouraging cash transactions and furthering the digital payment drive. For the basic no-frills accounts, maximum four cash withdrawals would continue to remain free and there would be no fees for cash deposits.
In case of ICICI Bank, the charges are same as they were before the demonetisation move announced on November 8, while there is an increase in such fees in case of some others.
According to details on ICICI Bank website, there will be no charge for first four transactions a month in home branch while Rs 5 per thousand rupees would be charged thereafter subject to a minimum of Rs 150 in the same month.
The third party limit would be Rs 50,000 per day.
For non-home branches, ICICI Bank would not charge anything for first cash withdrawal of a calendar month and Rs 5 per thousand rupees thereafter subject to a minimum of Rs 150.
For anywhere cash deposit, ICICI Bank would charge Rs 5 per thousand rupees (subject to a minimum of 150) at branches, while deposit at Cash Acceptance Machine would be free of charge for first cash deposit of a calendar month and Rs 5 per thousand thereafter.
ATM intercharge charges have also been re-introduced.
At Axis Bank, the first five transactions or Rs 10 lakhs of cash deposits or withdrawals would be free and charged at Rs 5 per thousand rupees or Rs 150, whichever is higher.
It could not be ascertained whether the public sector banks have also begun imposing such charges.
When contacted, a senior official said there has been no directive from the government to the banks regarding levy of such charges.