Several banks reintroduced or imposed charges on cash transaction above a certain prescribed limit.
The government has urged banks, including private entities to reconsider their move to impose cash transaction charges, ANI said.
In the last few days, several banks have imposed charges on cash transactions above a prescribed limit in a bid to keep them at a minimum. While this was being touted as yet another move towards a cashless economy and encourage digital transactions, the government has now asked the banks to reconsider their decision to impose charges.
In the aftermath of demonetization, HDFC Bank recently issued a notification where it said that its customers will only be able to avail four free withdrawal and deposit (cumulative) transactions from the banks. Over and above that, they will be charged a minimum Rs 150 plus taxes and cess.
READ MORE: SBI, HDFC, Axis and ICICI Bank: All you need to know about the revised transaction charges
The government has now asked urged banks, including private ones to reconsider charges on cash transactions and ATM withdrawals above certain limits.
Apart from HDFC Bank, the state lender permits its savings bank account holders to deposit cash only three times a month free of any charges. After that a levy of Rs 50 would be imposed. On current accounts, the levy could go as high as Rs 20,000.
Axis Bank have up to five free transactions and then Rs 2.50 charge per Rs 1000 or Rs 95 per transactions whichever is higher; while for ICICI Bank customers, only the first four transactions are free in the home city but Rs 5 per Rs 1000 would be charged thereafter, subject to a mimimum charge of Rs 150 in the same month.
The government has also asked banks to revoke charges on ATM withdrawals. SBI has imposed a charge of up to Rs 20 and Rs 10 for more than five withdrawals from other banks' ATMs.
Apart from this, the government has also asked SBI to reconsider it's decision of imposing a penalty on non-maintenance of minimum balance in accounts from April 1, sources said.
Over the weekend, SBI notified its customers that it would be obliged to maintain a minimum balance in their accounts from April 1 or pay a penalty.
SBI said maintaining Rs 5000 would be mandatory for accounts in metros, Rs 3000 in urban areas and Rs 2000 in semi-urban areas and Rs 1000 in rural areas.
SBI said, "The penalty to be charge will be based on the difference between the minimum balance required and the shortfall. In metropolitian area, if the shortfall is higher than 75%, a charge of Rs 100 plus service tax will be levied. If the shortfall lies between 50-75%, the bank would charge Rs 75 plus service tax and Rs 50 plus service tax for a shortfall between 50%.
In rural areas, the penalty would be between Rs 20 to Rs 50 plus service tax, said SBI in a notification."
Government's request to the banks comes at a time when there is a Change.org titled 'Bank transaction charges to be revoked' petitioning the Government of India, the Reserve Bank of India, the Prime Minister, Finance Minister, and the RBI governor, to revoke these charges. The petition reads, "The new imposition of bank transaction charges are unjustified. When our Respected PM is working so much on digital India and to cover 100% population with a bank account. I feel it is totally unjustified to impose such hefty charges on transactions."
The petition was filed by a Nikul Aggarwal.
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