'Fees on cash transactions amounts to financial terrorism'

Objecting to the charges, Khandelwal said if government wanted to leverage digital payments, it should absorb transaction charges by subsidising them to the banks. He also demanded effective incentive schemes to promote more and more digital payments in India.

The move by private sector lenders to levy fees over four cash transactions at their branches has attracted criticism by a traders' body.

The Confederation of All India Traders (CAIT) termed the charges as "financial terrorism".

CAIT General Secretary Praveen Khandelwal told IANS that this was no way to encourage digital payments.

Objecting to the charges, Khandelwal said if government wanted to leverage digital payments, it should absorb transaction charges by subsidising them to the banks. He also demanded effective incentive schemes to promote more and more digital payments in India.

A few private sector banks have started levying heavy charges on cash transactions. The move comes four months after Prime Minister Modi's demonestisation drive which has pushed the nation at the cusp of a digital revolution.

These charges can go up to Rs 150 depending on the number of transactions made in a single month. The exorbitant charges on cash transactions will deter people from pursuing cash transactions. So far, PSU banks have not applied such high taxes on cash transactions but the government did put a cap of Rs 3 lakh on transactions done in cash.

Banks including HDFC Bank, ICICI Bank and Axis Bank began charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month. The charges are being levied on savings as well as salary accounts effective from March 2, 2017, leading private sector player HDFC Bank said in a circular.

The move was seen in some quarters as aimed at discouraging cash transactions and furthering the digital payment drive. For the basic no-frills accounts, maximum four cash withdrawals would continue to remain free and there would be no fees for cash deposits.

In case of ICICI Bank, the charges are same as they were before the demonetisation move announced on November 8, while there is an increase in such fees in case of some others.