Finance industry experts believe the brunt of the negative impact of the move would be faced by self-employed and small businesses, while the salaried class might not face much inconvenience.

Leading private sector banks – HDFC Bank , ICICI Bank and Axis Bank – have over the week announced new charges on cash transactions beyond certain limits. While the move may appear to be against the interest of customers, should you be the one to worry about its impact? Finance industry experts believe the brunt of the negative impact of the move would be faced by self-employed professionals and small businesses, while the salaried class might not face much inconvenience. “Self-employed customers of banks are used to more transactions and thus would feel inconvenienced or would have to pay the charges. The salaried class generally do not withdraw or deposit cash more than 3-4 times a month, either from the branch or ATMs. However, with these new levies, those who have a tendency of making frequent cash transactions might be forced to plan out their finances better so that they restrict the number of cash withdrawals or taking out more cash in
one withdrawal,” Rishi Mehra, CEO of Wishfin.com said. Parth Pande, Co-founder and CEO, Finance Buddha, feels small businesses would be most hurt by the new move by banks. “The main impact will be felt by small businesses who make daily payments to vendors and others in cash and those bank customers who have yet not adopted the newer technology-led payment mechanisms, mainly poor people and old people,” Pande said. According to the new schedule of charges, HDFC Bank, ICICI Bank and Axis Bank would allow four free cash transactions a month, and would levy a minimum charge of Rs 150 per transaction thereafter. HDFC Bank will permit cash withdrawals and deposits of up to Rs 2 lakh a month from the home branch (where the account was opened). Axis Bank has allowed its customers to transact cash up to Rs 1 lakh in a month in the home branch beyond which charges will be levied. Axis has said it does not differentiate between home and non-home branch.

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Pande feels bank customers should make an extra effort to adopt digital transactions to avoid new charges. “There is a clear mandate from the government to move towards digital transactions. Customers have to develop the habit of making digital transactions even for small amounts, and move away from dependence on cash. Banks have chosen a push approach for the same by creating a structure where consumers will now have to look at these channels more actively,” he said.

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