With the banks levying a fee for over four cash transactions at its branches, the Confederation of All India Traders (CAIT) on Thursday said the charges amounted to "financial terrorism".
"We strongly object levy of abnormal charges by banks on withdrawal of cash more than four times from saving bank accounts. Levy of such charges is a kind of financial terrorism on account holders. It can't be the way to encourage digital payments and putting the people at mercy point," CAIT General Secretary Praveen Khandelwal said.
"If digital payment is to be leveraged, the government must absorb transaction charges by subsidising the same to banks and effective incentive schemes must be announced to promote more and more digital payments in India," Khandelwal said.
In a bid to discourage cash transactions, banks like HDFC Bank, Axis Bank and ICICI Bank are levying a transaction fee of Rs 150 on deposit or withdrawal of cash from the savings accounts at bank branches beyond four to five times in a month.
While HDFC Bank brought the rule into effect only on March 1, Axis Bank implemented it from January 1, that is after the demonetisation period. On the other hand, ICICI Bank says, the rules have not been changed and the Rs 150 fee has been applicable from July last year.
"There are four free cash transactions per month. Fifth transaction onwards Rs 150 per transaction (plus taxes and cess) would be levied," HDFC Bank said in a statement.
At its home branch, HDFC Bank has kept an upper limit of Rs 2 lakh per month per account while above that Rs 5 per Rs 1,000 or part thereof, subject to a minimum of Rs 150 (plus taxes and cess) will be levied.
ICICI Bank has already been levying a similar fee since July last year on cash transactions beyond five.
"It is nil for the first four transactions in a month. Thereafter Rs 5 per Rs 1,000 or part thereof, subject to a minimum of Rs 150 in the same month. The maximum limit is nil for self but Rs 50,000 per day for the third party," according to the list of ICICI Bank transaction charges.
Axis Bank said that five transactions or Rs 10 lakh, whichever is earlier, for cash deposits or withdrawals are free. Beyond that Rs 5 per Rs Rs 1,000 or Rs 150, whichever is higher will be applicable for Axis Bank customers.
Public sector lender State Bank of India (SBI) said it charges nominal Rs 50 beyond three transactions in a month, though there is no upper limit on the amount of cash transacted.
"These charges are already existing. The same have been renewed for the next financial year from April 1. It is to deter the customers from visiting the branch but the charges are very nominal. As it is, the customer does not need to visit the branch often because we provide 10 free withdrawals in a month from ATMs," an SBI official told IANS.
Private lender YES Bank also follows in the footsteps of the SBI and has a nominal charge of Rs 50 beyond five transactions or Rs 5 lakh of deposits, whichever is earlier.
If the customer exceeds five transactions, he will be charged Rs 3 per Rs 1,000 with a minimum limit of Rs 50. YES Bank said it, on the other hand, encourages people to visit their branches.
"These charges are nominal and towards recovering our costs. We believe that customers coming to our branches will help us demonstrate our service capability and act as a stronger engagement tool. Hence, we encourage customers to visit and experience our branches," a YES Bank spokesperson told IANS.