Banks can charge over 30% interest on credit card dues: SC
New Delhi, Dec 26 (PTI) Banks can charge over 30 per cent on credit card dues from customers after the Supreme Court set aside a sixteen-year-old National Consumer Disputes Redressal Commission verdict, which held charging excessive interest rates amounted to an unfair trade practice.
A bench of Justices Bela M Trivedi and Satish Chandra Sharma said NCDRC’s observations that the rate of interest in excess of 30 per cent per annum was an unfair trade practice was “illegal” and an interference with the clear, unambiguous delegation of Reserve Bank of India’s powers.
The court said the ruling was contrary to the legislative intent of the Banking Regulation Act, 1949.
In the opinion of the apex court, banks had in no manner made any misrepresentation to deceive the credit card holders and the pre-conditions of “deceptive practice” and unfair method were manifestly absent.
The court said NCDRC had no jurisdiction to rewrite the terms of the contract entered between the banks and the credit card holders, which the parties had mutually agreed upon.
“We agree with the submissions made by the Reserve Bank of India, that the question of directing the RBI to act against any bank does not arise, in the facts and circumstances of the present case and that there is no question of the RBI being directed to impose any cap on the rate of interest, either on the banking sector as a whole, or in respect of any one particular bank, contrary to the provisions contained in the Banking Regulation Act, and the circulars/directions issued thereunder,” the bench said in its December 20 judgement.
