Moneylenders could take lessons from banks on how to charge interest rates.
Over the past few days, nearly all banks from public sector giant State Bank of India to private sector lenders like ICICI Bank and HDFC Bank have raised interest rates to as high as 50 per cent per annum for their credit card customers.
Even foreign players such as Deutsche Bank and HSBC have either raised or are in the process of raising the “finance charges”. These rates, between 35 and 50 per cent at present, are charged on credit card users for payments made after the credit-free period, which ranges from 15 days to two months.
These are more than three times the current benchmark prime lending rates of less than 15 per cent at most banks.
The high rates are being charged despite a National Consumer Disputes Redressal Commission (NCDRC) ruling last month that “charging of interest at rates in excess of 30 per cent per annum from the credit card holders by banks for the formers’ failure to make full payment on the due date or paying the minimum amount due, is an unfair trade practise”.
To top it all, these high charges, which varied between 30 and 40 per cent until now, get a mention only in the asterix-marked fine prints of credit card statements and there is virtually no limit to what level these could be raised.
On their part, banks claim that it has become necessary to raise these charges, which a customer has to pay after the expiry of his or her credit-free period, in the wake of tightened liquidity in the system.
However, while the hike in interest rate for secured lending products such as auto and home loans have been mostly about 0.5-1.0 per cent, the unsecured credit card finance charges are being increased by about 10 per cent.
