Taking your own money out of your own savings account will cost you money, if the recommendations of an advisory group on payment systems set up by the finance ministry are accepted.
Taking your own money out of your own savings account will cost you money, if the recommendations of an advisory group on payment systems set up by the finance ministry are accepted.
The panel, under the chairmanship of DK Mittal, finance secretary, has recommended that savings bank account holders can issue cheques to third parties, but any issued to encash money — or those ‘self/bearer’ cheques — will have to be charged so that paper-based payment products are discouraged.
Currently, account holders using self/bearer cheques in their home branch are not charged.
The panel also suggested that the government also ought to bear the charges, until cheque payments became substantially lower, when it comes to mandatory cheque payments.
“A customer keeps money in his savings bank account because he can withdraw funds from there as and when required. The interest earned on the money is lower than fixed deposits. If you are planning to charge the customer both ways — that is for withdrawal of cash from their own bank ATMs as well as withdrawal of cash by way of self cheques from home branch, they will lose more. To boot, they are also not getting the benefit of higher rates offered by the bank on fixed deposits,” said an official of a public sector bank who did not wish to be named.
The recommendation also said that the Reserve Bank of India (RBI) will issue directions under Section 18 of the Payment & Settlement Systems Act, 2007, as per which, with effect from April 1 next year, all transactions of government entities would be done using the electronic payments.
DNA reported last week that one of the recommendations of the committee is also to levy charges on automated teller machine (ATM) transactions in customer’s own bank ATMs. Both the moves, if implemented, will result in customers being charged for withdrawing their own money in their bank.
Some bankers felt these recommendations should not be implemented for all bank customers. “Customers who are not technology savvy will find it difficult to adopt while others who are not financially well off may find even the small charges a burden,” said another official of a public sector bank who also did not wish to be named.
The additional benefit for banks is that they can redeploy staff involved in clearing cheques elsewhere.
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