The Supreme Court today stayed the judgement of the National Consumer Commission which had capped the interest chargeable on credit card holders at 30 per cent.
The Indian Banks Association, Standard Chartered Bank, HSBC and Citibank had appealed last year against the judgment and it was admitted for hearing. However, the matter was mentioned again in the court today as the commission’s order was going to be executed on February 13.
On the urgent mentioning by the banks, a bench headed by Justice B N Agrawal stayed the operation of the consumer commisison order.
The effect of the Supreme Court order is that the banks can now charge interest at rates higher than 30 per cent.
In their appeals, the banks asserted that they were following the guidelines of the Reserve Bank of India, which was the only authority to regulate the fixing of the interest. Therefore, the commission had no jurisdiction to pass an order directly to the banks.
On the contrary, the consumer group 'Awaz' which moved the commission last year, argued that the commission had failed to notice that the banks were charging more than 90 per cent if one took into account the interest on default combined with the hidden costs.
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The prevailing interest even for unsecured finance fixed under the Money Lenders Act was below 20 per cent, the consumer group contended.
Even after deregulation, the benchmark prime lending rate as fixed by the banks was in the range of 10-15.5 per cent even for unsecured finance.