Starting March 1, banks to impose charges on cash transactions

Banks will levy transaction charges above specified cash or transaction limit per month starting March 1.

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Comes Wednesday and most banks are expected to begin levying transaction charges on customers. Even as the country marches past the demonetisation era, banks will begin charging for transactions above a certain limit on a monthly basis. Banks like HDFC have started notifying customers on the charges while ICICI and Axis are in the process of deciding transaction limit.

Banks to levy transaction charges starting March 1

HDFC bank has issued a notification that only four cash transaction including deposit and withdrawal will be free and after that, a customer will have to shell out a minimal fee ranging from Rs 5 to Rs 150 depending on the transacted amount. The cap on the transaction has been placed at Rs 2 lakh per month per account. Any transaction beyond Rs 2 lakh will be levied a charge. Finance Minister Arun Jaitley has already put a cap of Rs 3 lakh for a cash transaction in the union budget for 2017-18.

Axis Bank, however, has extended the number of transactions to five or transaction up to Rs 10 lakh in a month which will be charge-free. Any transaction above the specified limits will be levied a charge. ICICI is also planning to levy charge after the fifth transaction, for cash withdrawal and deposit cumulatively. The bank proposes to charge a customer Rs 150 in total or Rs 5 for every Rs 1000 transacted with. The bank has not specified any maximum transaction limit.

Banks believe that the charge will discourage people to withdraw cash and help move towards digital payments. Cash crunch continues to be a reality and the move to levy charges hopes to limit usage of liquid cash.

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