All you need to know about new cash transaction charges in banks

All you need to know about new cash transaction charges in banks

Recently, several banks such as HDFC bank, ICICI bank, and Axis bank have started charging a minimum amount of Rs.150 per cash transactions i.e. including deposits and withdrawals beyond four transactions in a month. Cash transaction charges are the another move by banks to push India towards digitalisation and encourage them for cashless transactions.

The State bank of India, the Country’s largest bank, has recently announced that from 1st April 2017, they will start imposing a penalty of Rs.20-100 on the non-maintenance of Minimum Average Balance (MAB) in savings banks accounts and for current bank accounts, the penalty will be of Rs.500.

Also, the bank has increased the minimum balance requirement in the bank accounts. It will be as high as Rs.5000. For urban and semi-urban branches, the MAB has been fixed to Rs.3000 and Rs.2000 respectively.

Also from April 1, SBI will charge Rs.50 for each transaction beyond the free transaction limit, plus service tax. Free transaction limit for the saving account holders in SBI bank would be three transactions per month.

Finance Minister of India, Mr. Arun Jatley has also asked SBI and other private banks to reconsider the cash transaction charges and other charges they have decided to impose on cash transaction above a certain limit. 

The free transaction limit varies from banks and banks and the type of accounts. For example, HDFC bank, ICICI banks and The Nova and Edge accounts of Kotak Mahindra Bank allow four free transactions per month whereas Axis bank and Kotak Mahindra’s Pro and Classic Account holders, the number of free transactions is five.

Among the payments banks such as Airtel payment bank. It will charge Rs.1 to Rs.25 for the withdrawals in the range of Rs.10 to Rs.4000 and 0.65% for accounts above Rs.4000.

Transaction Fees on ATM Withdrawals

Transaction charges mentioned above i.e. Rs.150 is not applicable on ATM withdrawals. ATM withdrawals will not be counted in these 4 cash transactions charges. Number of free transactions for ATM will be the same i.e. five (Most of the banks do allow five free transactions).

The Impact of Cash Transaction Charges

These cash transaction charges would directly affect those people who make withdrawals on a daily or weekly use. According to Economic Times survey, around 70 per cent respondents of the 11,081 citizens voted on this poll, want charges imposed by private banks to be removed.

These cash transaction charges will create a big impact on small businesses like shopkeepers and traders who tend to deposit each day collection in the bank accounts or businesses with cash flow on a regular basis.

Image Source: Voice&data

Source: Livemint, MoneyControl