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Foreign banks to charge 30 per cent interest :SC
Published on Tue, Sep 09, 2008 at 15:34 in Business section
Tags: Foreign Banks, Interest , New Delhi
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New Delhi: If you are credit card holder of a foreign bank be prepared to shell out 30 per cent or rate of interest annually. And this time the Supreme Court is on the banks’ side.
The apex court has over turned an earlier order by a consumer court, which had restrained foreign banks from charging more than 30 per cent interest.
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Foreign banks had argued that capping interest rates on credit card payments went against the policy set by Reserve Bank of India.
The RBI policy states that banks are free to determine rates of interest on non-priority sector personal loans.
A group of foreign banks, which have been restrained by a consumer court from charging an interest of over 30 per cent a year from credit card holders, today said they are free to decide interest rate on credit card dues.
Challenging the consumer court's judgment in the Supreme Court, foreign lenders said capping of interest rates on credit card payment was contrary to RBI policy that stated that banks were free to determine rates of interest on non- priority sector personal loans without reference to Benchmark Prime Lending Rate (BPLR) and regardless of the size of loan.
The foreign banks which have moved the apex court are Citibank NA, Hongkong Shanghai Banking Corp, Standard Chartered Bank and American Express Bank.
National Consumer Disputes Redressal Commission in judgment has restrained these banks from charging an interest rate of over 30 per cent a year from credit card holders who fail to make full payment on the due date.
A bench headed by Justice B N Agrawal while admitting the petitions issued notice on the interim applications seeking stay on the consumer court's order.
(With inputs from PTI)
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If the SC decision were to be implemented,then we will surely have a severe meltdown and bankruptcy in the foreign
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