On Thursday, a bench of Justices Bela M. Trivedi and Satish Chandra Sharma ruled in favour of banks charging interest rates over 30% on credit card dues and clarifies that such charges are not unfair trade practices but rather fall within the ambit of the Reserve Bank of India’s (RBI) regulatory framework
The Supreme Court has ruled that banks can charge over 30% interest on credit card dues, overturning a 2008 decision by the National Consumer Disputes Redressal Commission (NCDRC) that had called such high rates unfair. The court stated that the Banking Regulation Act, 1949, grants banks the autonomy to set interest rates in line with RBI directives.
The bench further noted that credit card holders are well-informed about interest rates and penalties during the application process. Therefore, the terms of the agreement, mutually accepted by both parties, cannot be deemed unconscionable or unfair.
The court clarified that the RBI is the sole authority to regulate bank interest rates. There’s no evidence that banks violated RBI’s policies, reaffirming the central bank’s oversight.
Adjudicating on 16-year-old appeals by Citibank, American Express, HSBC and Standard Chartered Bank, SC termed the NCDRC’s order as “unwarranted”, saying it had no jurisdiction to rewrite the terms of the contract entered between the banks and the credit cardholders, which the parties had mutually agreed to be bound by.
