FEE ON CASH TRANSACTIONS

HDFC Bank and Axis Bank have come out with the revised charges structure on Cash Transactions.  How will this affect a common man?  Let us see here.

An individual, prior to demonetisation,  had not visited his bank branch for over a year.  Thanks to the comforts provided through ATMs, internet banking and debit cards,  which saw no opportunity of his visiting the bank branch otherwise.   Now, that there is a four free transactions at branches imposed by banks  which would hardly affect the customer.  Many of the Savings Account customers visit a branch for other general work and not for depositing or withdrawing cash.  Normally a customer go to a bank branch for service related matters like, verification of signature or to get a demand draft.   From March 1, HDFC Bank has revised the fee and charges on some of its savings accounts to bring them at a par with aristocrats.  Here is the structure.

• After the first four free transactions in a month, the bank will charge Rs. 150 for every additional deposit or withdrawal at a branch.
• Customers can transact up to Rs. 2 lakh in a month at their home branch for free.
• If deposits and withdrawals cross this limit, the bank will charge Rs. 5 for every Rs. 1,000/-.
• Thirdparty transactions have been restricted to Rs. 25,000 a day, beyond which there will be a charge of Rs. 150.
• ICICI and Axis have imposed similar charges since March 1, 2016.
• These were waived during demonetisation (between November 8 and December 31, 2016).
• From January 1, 2017, these charges were restored.

Even big public sector banks plan to retain the current charges in the coming financial year.  News from SBI reveals that the bank has no plan to revise charges for deposit or withdrawal at branches and that they have not made any changes to the fee and charges for ATM transactions.  This cap is expected to affect small businessmen.   When they deposit daily cash in their current accounts, they tend to carry out transactions in their savings account at the same time.   They can work around and avoid these restrictions by withdrawing and depositing higher amounts each time.  Further,

• Irrespective of capping or charges, financial planners suggest individuals adopt digital modes of transactions wherever possible.
• Charges for digital payments such as online bank transfer are low.
• Mobile transactions based on the Unified Payment Interface (UPI), meant for small payments, are free at present as the government is trying to promote digital transactions.
• Going digital also is helpful in maintaining a proper record and track the same.
• Also it is suggested to monitor one’s bank account and credit card statements and check the expenditures, and avoid spending in cash which leads to record maintenance.
• It is helpful in many ways, from tracking the investments and also avoid over spending.
• A self-employed person is also advised to for digital which would otherwise be handy while filing tax return.  Immediately the expenses eligible for deduction can be traced.  Further a bank statement also is helpful in addressing any queries from Tax authorities.

Thus one should understand that the new restrictions apply only to deposits and withdrawals at a branch. Going digital, will obviously pave way for an efficient record keeping.