Mumbai: In a bid to discourage cash transactions, country’s second largest private sector lender HDFC Bank has decided to steeply increase the fees for savings account holders on a slew of activities involving cash.
The move assumes significance as the government post demonetisation has been encouraging people to shift to a cash-less or less-cash regime and use digital mode for transactions.
HDFC Bank has decided to steeply raise the charges on certain transactions, capping cash component in others and also introducing charges on certain transactions from 1 March, a bank official told
The city-headquartered bank has capped the third-party transactions at Rs25,000 a day, reduced the number of free cash transactions at branches to four from five earlier and also raised the fee for non-free transactions by a steep 50% to Rs150, it said on its website.
Earlier, it used to allow Rs50,000 cash transactions, both withdrawals and deposits per day, the official said, adding the review is only for salary and savings accounts. The bank has also capped the free cash transactions at home branches, including deposits and withdrawals at branches at Rs2 lakh, above which customers will have to pay a minimum of Rs150 or Rs5 per thousand.
For non-home branches, the free transactions are only Rs25,000 after which fees set in at the same level, he said. It can be noted that a slower-than-expected fee income growth was one of the reasons which led the bank report its slowest quarterly profit growth in the past 18 years in the just concluded December quarter, when its bottomline growth slipped to 15%, as a slew of charges were discontinued during the note ban.
The bank official said the review has been done to discourage usage of cash and push digital transactions, which have grown at a higher pace. The official claimed that the hiked charges are at par with the industry trend. Its larger peer ICICI Bank’s website shows a minimum charge of Rs150 for more than four cash transactions (deposits and withdrawals) at home branches for savings accounts, similar to what HDFC Bank is proposing.
Axis Bank, the third largest private lender, charges Rs150 or Rs5 per thousand, for cash deposits of over Rs1 lakh per month or from the fifth withdrawal at branches, its website said.
It can be noted that a high-level panel led by former finance secretary Ratan Watal had called for imposing “nominal charges after a certain limit” for cash transactions. Working towards a less-cash economy, the budget 2017- 2018 has placed a blanket ban on cash transactions above Rs3 lakh, following the report by the SIT on black money.