Your bank could now charge for withdrawing cash and depositing cheques

Yourbank could now charge for withdrawing cash and depositing cheques 
Withmany of us engaged in an economic activity to earn a livelihood, we have bank
accounts; and deposits and withdrawals are the core activities which we
perform. Today with technological innovation we have various avenues (such as ATMs,
internet banking, mobile banking, phone banking) through which we can carry out
our banking activity, but yet there are certain banking transactions such as
cash deposits, cash withdrawals and cheque deposits, which we yet prefer doing
physically by visiting our bank. But now it seems that the Reserve Bank of
India (RBI) wants to preclude bank account holders to do such physical
banking transactions.

Recently, the RBI floated a discussion paper on 'Disincentivising Issuance and
Usage of Cheques' thereby seeking to discourage usage of cheques and
cash withdrawal, by levying a charge on such transactions. "In order to
avoid increased dependence or slippage to cash-based transactions, high (both
in amount and frequency) cash withdrawals and deposits of cash by individuals
may also be charged," said the discussion paper.

The other major suggestions enunciated in the discussion paper include:
Restriction on the number of cheque
books (by keeping a minimum number on a per annum basis, and thereafter levying
a charge - which could be moderate to steep, beyond the minimum number)
Ban on post-dated cheques (PDCs) for
fresh loans, with suitable conditions for late payments and non-payments which
should be disclosed upfront
Existing PDCs should be converted
into electronic payment mandates
For cheques issues beyond stipulated
limit, charges may be levied at the time of payment/debit to the account by the
paying bank when the cheque is presented for payment through clearing
Discourage cheque collection boxes
at public places
Mandatory on-line payment of credit
card bills
It
is noteworthy that in order to encourage greater adoption of electronic mode of
payment, the RBI has also mentioned that the Government departments and
agencies should immediately stop levying "convenience charge" on
customers who prefer to make payments using electronic means such as cards and
online banking.

According to RBI, corporates and institutional customers are the largest users
of cheques across all value bands (accounting for 54% - 64% of the cheques
processed), and thus for them access to cheque books should be made costlier,
no free cheques books should be issued to them and steep charge should be
levied by all banks on cash deposits/withdrawals by current account holders
into/from their accounts. It is also said that for payment of dividend through
cheques, an additional charge should be levied.

The
aforesaid discussion paper, on which the RBI has invited comments from public
by February 28, seeks to establish a "less-cash" society and
encourage greater adoption of electronic mode(s) of payment. But we think that,
it is vital for the central bank to recognize that there may be several small
businesses (in nature of proprietorship and partnership concerns) or even older
individuals who may be affected as they may not be very technologically savvy
to perform their banking transaction via the electronic mode of
payment or even pay their utility bills online. Such a proposal if goes through
may also impede in the Government's agenda of financial inclusion, since many
aren't very well-versed with electronic mode(s) of payment.