State Bank of India, the country’s largest lender, will charge Rs50 for each transaction beyond the free transaction limit, plus service tax, from 1 April. Top private sector banks have started imposing cash transaction charges—another move to nudge customers towards cashless transactions.
Customers of ICICI Bank, Axis Bank, HDFC Bank and Kotak Mahindra Bank will have to pay minimum Rs 150 for cash transactions beyond the free limit. Savings bank account holders of SBI will be able to make three free cash transactions in a month.
The free transaction limit is different for different banks and is also based on the types of accounts. For example, ICICI Bank, HDFC Bank and the Edge or Nova savings accounts of Kotak Mahindra Bank allow four free cash transactions each month. For Axis Bank and Kotak Mahindra’s Pro or Classic account holders, the number of free transactions is five. Customers with the Ace and Platina accounts at Kotak Mahindra Bank can perform 10 free cash transactions per month.
Most public sector banks and some private sector banks have not yet announced cash transaction charges. But even now, public sector banks charge a transaction fee beyond a certain limit. Punjab National Bank allows 50 free transactions in a quarter, after which it charges Rs5 per transaction, according to details given on Paisabazaar.com.
Among the payments banks, Airtel Payments Bank charges Rs1 to Rs25 for withdrawals in the range of Rs10 to Rs4,000 and 0.65% for amounts over Rs4,000. IndiaPost Payments Bank charges Rs15-35 for withdrawals of up to Rs10,000. But this is only for door-to-door banking.
ATM Withdrawals
Transaction charges by banks will only be applicable on cash transactions at branches; ATM withdrawals will not be considered in calculating these number of transactions. The number of free ATM transactions will remain the same.
Most banks allow five free ATM transactions every month without any additional cost at their own ATMs. Three transactions are free at other banks’ ATMs in six metro cities—Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad. For non-metro users, the number of free transactions at other banks’ ATMs are five.
“There cannot be unlimited free transactions,” said Naveen Kukreja, co-founder and chief executive officer, Paisabazaar.com, adding that the number of free transactions will vary based on the relationship customers have with their banks.
impact
The new charges could pinch people who make withdrawals for daily or weekly use, or those who frequently transfer money from one city to another to their families.
“In all likelihood, most such high frequency transactions will be low in value,” Kukreja said. The biggest impact, however, is likely to be on small businesses like shopkeepers and traders who tend to deposit each day’s cash collection in their bank accounts the next day, he added.
However, the restrictions on cash transactions are largely aimed at savings bank accounts. The free transaction limits for current accounts remain much liberal.
For instance, a normal current account holder in SBI can deposit Rs25,000 per day without any charge, and thereafter a charge of Rs0.75 plus service tax per Rs1,000 would be applicable.
So, if you own a small business and make banking transactions through a current account, the impact of the limited cash transactions may not have a major impact on you. But if you frequently use savings bank account for these transactions, you may have to be careful with how many times you do so.
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