| CERC has suggested that the lender must make adequate enquiry before extending credit about borrower's ability to repay. He should also see whether a request for loan is an appropriate case for granting loan. |
| "If our recommendation for setting up a Consumer Credit Regulatory Commission is not acceptable, government should consider making requisite amendments to the Consumer Protection Act," said Manubhai Shah, chairman of the CERC. |
| He also asked the government to encourage consumer groups to organise programmes to educate those taking loans. |
| Even after signing the agreement, the consumer or borrower must have the freedom to cancel the contract within a reasonable period, popularly described as the "cooling off" period. "All the terms and conditions, including the effective annual finance rate, must be disclosed," he added. |
| Consumer groups led by CERC will persuade the Union government to have a separate enactment called 'Unfair Terms of the Contract Act', on the lines of a British law. The basic provision of the British law is that the court will not give effect to a one-sided contract. |
| A member of the task force is constituted by the Union government, Shah said that there are no specific law regulating the management of consumer credits in India, except the 'Guidelines on Fair Practices Code for Lenders' issued by Reserve Bank of India. |
| Shah said that apart from one-sided contracts/agreements, Indian consumers suffer from the unfair behaviour of lenders before and after extending credits. |
| While borrowers are not allowed to prepay the debt, they will have to bear excessive security/guarantee money and shoulder excessive/undisclosed fees, service charges and high rate of interest. |
| Shah also said that CERC received a large number of complaints from credit cards users. |
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