IN RESPONSE to criticism over banks charging a cash deposit fee, the Slovak Banking Association (SBA) is calling on its members to temporarily stop charging this fee for the next six months. With this step banks aim to appease their clients and the Finance Ministry, the latter of which has prepared a law that will cap cash transactions, to be effective as of January 2013.
Banks will not charge the cash deposit fee to private individuals and the self-employed who deposit cash to their own accounts from December 1 to May 31.
“I assume that most SBA members will join the initiative,” Ladislav Unčovský, the executive director of SBA said as cited in the SBA press release. “We are convinced that other non-banking institutions handling cash and charging fees for this operation should also join this initiative.”
The ministry wants to cap cash transactions in order to reduce tax evasion in Slovakia.
The level above which cash transactions between companies would be prohibited is proposed to be €5,000, while cash transactions between private entities should be allowed up to €15,000. Along with this step it has called on banks to scrap the fee they charge to clients when depositing cash or else it will ban it.
Currently banks often charge a fee of €0.5 for each cash deposit. This fee is one of the least popular fees and tops a ranking of bank fees considered to be the most absurd.
Banks support all the initiatives and measures to improve the collection of value-added tax by which they simultaneously contribute to the consolidation of the budget, SBA wrote in its press release.
“Philosophically we welcome the proposal of the Finance Ministry to prevent tax evasion by introducing a border for cash operations and contribute in this way to the consolidation of the state budget,” Igor Vida, SBA president wrote in the press release.
According to SBA, the handling of cash is one of the costliest operations, on which banks spend €30 million annually. This includes the transport of cash, costs of insurance, wage costs, costs for the security of banks’ offices, costs of bank technologies and software related to cash as well as fees paid to the National Bank of Slovakia.
Vladimír Dohnal, analyst with Symsite Research, views the scrapping of the fee for six months as a populist step, which he believes makes no sense from an economic standpoint. He perceives this step as the banks’ response to criticism from the Robert Fico cabinet, and as such is an attempt to gain popularity.
By scrapping the fee temporarily the banks do not want to lose face, Dohnal told the Hospodárske Noviny.
He also disagrees with the intervention of the cabinet into private sector business.
“This is a private sector,” Dohnal told the Hospodárske Noviny. “The cabinet should care only about competitiveness of the sphere, not about what they make a profit on.”