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Private sector banks to cap free cash withdrawals at branches

Update: An HDFC Bank official told MediaNama that the charges are being levied to discourage customers from usage of cash  and shift to digital modes of transactions in line with the government’s proposals to curb cash. The bank says that 71% of its transactions take place on Internet and mobile channels and 15% of transactions happen at ATMs and only 11% of transactions happen at branches (pdf).

Earlier: At a time when the government is looking to disincentivize the use of cash, three major private banks – HDFC Bank, ICICI Bank and Axis Bank – have started charging customers a fee for cash withdrawals at branches.

Starting from March 1, 2017, HDFC Bank will be charging customers with a savings bank account Rs 150 (plus taxes) after four transactions at a branch. At home branches (where the account was opened), customers will be allowed to withdraw Rs 2 lakh without any charges following which, they will be charged Rs 5 per thousand along with a minimum fee of Rs 150. At non-home branches, customers can withdraw Rs 25,000 without charges per day. They will be charged Rs 5 per thousand or part thereof, subject to a minimum of Rs 150. For, third party cash transaction, there is a limit of Rs 25,000 per day and a fee of Rs 150. Above Rs 25,000 these transactions are not allowed. Note that  the above charges not applicable to Prime, Classic, Preferred, Imperia or any other Managed program customers.

Meanwhile, at ICICI Bank, customers will have four free transactions and will be charged Rs 5 thereafter and will be subject to a minimum of Rs 150, it said on the website. This will also be applicable to deposits and withdrawals. It also has a number of charges similar to HDFC Bank.

At Axis Bank, customers will be allowed five free cash transactions or up to Rs 10 lakh, whichever is earlier, free per month. More details here.

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Banking cash transaction Tax (BCTT)

Last month, the committee of chief ministers on digital payments suggested the Central Board of Direct Taxes levy a banking cash transaction Tax (BCTT) on transactions of Rs 50,000 and above, to curb the use of cash.  It also considered a cap on a maximum allowable limit of cash in all types of large ticket size transactions. There were also proposals which sought to bring down threshold required for quoting the PAN card to Rs 30,000 from the existing Rs 50,000.

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