As banks put curbs on transactions, hike fees, customers empty accounts

Visakhapatnam/Hyderabad: The State Bank of India and other private banks limiting the number of free transactions and cash deposits and charging for breach of minimum balance could further hit the government’s ambitious digital economy and financial inclusion plans.

These new rules may force some consumers to close their accounts or to draw all the money at one go every month to avoid the transaction charges later on.

This may directly lead to a cash-centric economy rather than bringing outsiders into the banking fold. Recently, private players HDFC, ICICI, and Axis bank announced that they will charge Rs 150 after four free transactions a month.

Close on the heels of this, the State Bank of India announced that it will permit only three free cash deposit transactions a month and thereafter Rs 50 (plus service tax) will be charged for each transaction.

The SBI will also charge Rs 20 (plus service tax) after the consumer exceeds the free transaction limit on ATM transactions.

During a recent press conference in Velagapudi, Chief Minister Chandrababu Naidu asserted that this move from the banks will discourage the public from making digital transactions.

“The banks’ proposals go against our earlier recommendations. The digital economy will succeed when the digital currency costs the public less than physical currency does,” Mr Naidu observed.

‘Won’t block money, will shut account’
The announcement of transaction charges by a few banks and reports of an insufficient currency supply from the RBI, have sparked a large number of withdrawals by customers. The transaction charges are also making customers opt for more traditional forms of banking. S. Radhamma, from Ramantapur, a customer of the State Bank of India SBI said he was considering the shutting down of savings accounts with the bank.

“We have five accounts in my family — with SBI and SBH. SBH is going to merge with SBI on April 1 and similar transaction charges will be applicable for SBH customers. We need to block Rs 25,000 to maintain minimum balance. Why should we block our money? We are going to close my children’s accounts and will only maintain two accounts — my husband’s and mine,” she said.

Customers of other banks are also rushing to their branches to verify transaction charges and are expressing an interest in shutting down savings accounts.

Secretary of the Bank Employees’ Federation, M.S. Kumar, said since the announcements of transaction charges by three major banks, customers were interested in withdrawing more cash that what was required. “After the demonetisation, the cash crisis for banks was solved,” he said.