In a bid to promote digital transactions, ICICI Bank reportedly plans to impose a 'Cash Transaction Charge' on customers who go to a bank branch and deposit their EMI (equated monthly installment) in cash to repay loans.
The move has caused consternation for two reasons – first, it amounts to an additional charge above the contracted interest charges, and second, it is likely to hurt the financially less endowed borrowers more.
From 15th September, ICICI Bank plans to levy a charge of Rs 100 for payment of EMI by cash on various loan products and GST will be charged separately on this. These charges will apply to home loans, personal loans, car loans, consumer finance loans, education loans, commercial vehicle loans, two wheeler loans, construction equipment loans, medical equipment loans, office equipment loans, three wheeler loans, used car loans, government sponsored loans, farm equipment, farmer finance, loans to self help group, top up loans, pradhan mantri rojgar yojana and other products as identified by the bank.
Interestingly, while media reports seem to indicate that cash handling charges on EMI are a new development, we found, on checking the bank portal
, that ICICI Bank has already been charging this Rs100 as charges for cash payment of EMI.
Moneylife has reached out to ICICI Bank for a clarification but we have not heard from them yet. This story will be updated if and when we get a response.
Many customers are often not aware of the charges levied by banks on various services (cash deposit charges, cash handling charges, SMS alert charges, charges for lack of maintenance of average minimum account balance, annual debit card charges, card replacement charges, stop payment charges, cheque bouncing charges, standing instructions charges, documentation charges).
Cash handling charges are levied by many banks on cash deposits beyond a certain limit of transactions. In most cases, the first few transactions are free. Almost all banks insist on maintaining a minimum average monthly or quarterly balance in your savings account. In case you fall short of it, the bank levies a penal charge.
Usually the rules are more relaxed for transactions made at your home branch. Bankers say that cash handling charges form a significant part of charges levied by the bank. While transacting from your home branch allows you higher limits, you still have to pay charges of Rs50-150 per transaction, if you exceed that limit.
If you want to avoid shelling out unnecessary fees and charges, keep track of your accounts and cards, and use chargeable bank services only if you really need them. Keep track of all the transactions and check them carefully for all charges being levied.