Government asks banks to rejig fees e-channels to boost
The government has written to the Indian Banks’ Association (IBA), asking lenders to rework their charges for customers in a manner that incentivises digital transactions over cash transactions.
In a recent communication to the IBA, the finance ministry’s department of financial services has said that banks should consider cross-subsidisation of lowvalue digital transactions by high-value digital transactions or cash transactions. “Banks should proactively promote digital transactions and take all necessary steps to make them cheaper for customers than cash transactions,” the communication said.
Some bankers see the finance ministry’s statement on cross-subsidising low-value digital payments with cash transactions to mean that banks should start imposing charges on some cash deals. “Banks may re-examine the current policy of allowing certain number of free cash transactions, while charging for every digital transaction,” the circular said.
Through its department of financial services, the finance ministry has been pushing public sector banks to go digital. The directions to the IBA are seen as a move to get private banks on board. Although the government has the power to issue directions to the Reserve Bank of India to come out with guidelines, it has never in its history exercised this option.
Last year before demonetisation, a report on digital payments by Ashish Das, professor of statistics at IIT-Mumbai, had suggested that banks disincentivise cash to promote electronic payments.