The Government scrapped 500 and 1000 Rupee notes on November 8th 2016. The aim of this move was to destroy black money and catch tax evaders. Another benefit of this move; you and other citizens were forced to make payments using digital methods. Yes, you now pay using UPI, mobile wallets, debit and credit cards, BHIM App and even through Aadhaar enabled payment systems (AEPS). Before demonetization, more than 95% of transactions were in cash. Today, digital payments are fast gaining popularity.
After demonetization, the Government had imposed cash withdrawal limits. You could withdraw a maximum amount of INR 24,000 a week from your savings bank account. After February 22nd 2017, you and other citizens were allowed to withdraw INR 50,000 a week from your savings bank account. Just after demonetization, getting money from an ATM was a herculean task. Most ATM’s were shut as they had to be recalibrated to accept the new 500 and 2000 Rupee notes. You and other citizens did not have much cash in hand…What to do? You had to resort to digital payments….
Now something REAL BIG is happening. The RBI had removed cash withdrawal limits on March 13th 2017. Now, you and other citizens who simply love cash, can withdraw any amount from your savings bank account. Will you and other citizens get back to old ways where over 95% of transactions were in cash? Unfortunately….Many banks have started charging you for cash withdrawals and deposits. Why, the State Bank of India (SBI) is even asking you to maintain a minimum monthly average balance of INR 5,000, if you have an SB account in a metro city. Should banks be doing this? What’s their justification? Let’s find out.
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The Prime Minister Narendra Modi, launched the Pradhan Mantri Jan Dhan Yojana scheme on August 28th 2014. The aim of this scheme is each household should have a saving bank account. The PMJDY savings bank accounts are zero balance savings bank accounts, provided along with RuPay debit cards. More than 27 Crore savings bank accounts have been opened under the PMJDY scheme.
SBI manages about 11 Crore PMJDY accounts. These are subsidized bank accounts. How will SBI mange these accounts without charging you for cash withdrawals and deposits? This is what a prominent banker has to say on charges for cash deposits and withdrawals. You come to my bank and deposit cash. The teller has to count the money. Doesn’t the teller have to be paid? This money is stored in a safe deposit. What about its charges? When you withdraw money again it costs us. You also want free ATM withdrawals, free cheque book and no cash handling charges. How is the bank supposed to run?
Don’t you think banks should be charging you for cash deposits and withdrawals?
You and other customers say….Why should banks be charging for cash deposits and withdrawals? Banks pay just 4% interest a year on my SB accounts? Don’t banks earn good money from loans? Why should they be charging for cash deposits and withdrawals? Shouldn’t you have the freedom to deposit and withdraw cash as you wish?
How much cash will you withdraw from the ATM? Perhaps INR 10,000 or INR 20,000 at one time. You will be forced to make quite a few trips to the ATM and pay a lot in charges, whenever you withdraw money beyond the free transactions.
You and other customers say….Why deposit money in a savings bank account at all?
You and other citizens expected the Government to impose cash transaction tax on cash deposits and withdrawals in the Union Budget 2017. Fortunately for you, the Government did not oblige. Now, banks are doing what the Government has not done. They are charging you for depositing and withdrawing cash. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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