Private sector banks including ICICI Bank and Axis Bank have restored their cash transaction fees with effect from January, as a way of discouraging customers from using hard currency. HDFC Bank, on Wednesday, 1st March, increased their cash transaction fees from Rs.100 to Rs.150 and decreased the number of such transactions from 5 to 4 per month.
Both ICICI Bank and HDFC Bank will charge Rs.5 per Rs.1000 for cash withdrawals from the fourth transaction, with a minimum charge of Rs.150. Axis Bank will charge Rs.5 per Rs.10,000 or Rs.150, whichever is higher, from the fifth cash deposit or withdrawal.
According to an official at HDFC Bank, the reason for the increase in their cash transaction fees is to keep in tune with the rates charged by their competitors. ICICI Bank and Axis Bank already offer 4 free transactions per month, after which each cash transaction is charged Rs.150.
The Rs.150 fee charged by HDFC Bank does not include cess and tax, each of which will be charged separately. These charges will also be applicable on savings and salary accounts. Customers will be able to withdraw up to Rs.2 lakh from their salary or savings account from their home branch for a period of 1 month. Transactions that exceed this amount will be charged.
HDFC Bank has withdrawn cash handling charges, but, third party cash transactions will now have a daily limit of Rs.25,000. The bank will not charge children and senior citizens. ICICI Bank has placed a daily cap of Rs.50,000 for third party cash transactions. The bank will, however, not charge a fee for the first cash withdrawal per calendar month. Axis Bank will not charge a fee for transactions up to Rs.1 lakh from the home branch per month.
Banks had withdrawn cash deposit and withdrawal charges when demonetization was announced on November 8th, 2016, where high-valued Rs.500 and Rs.1,000 currency notes were demonetized. Private sector banks are now reinstating these charges. There is, however, no details on whether public sector banks will follow reinstating such charges.
This step has been taken to further the digital payment drive and promote cashless transactions in the country.