Supreme Court Admits Credit Card Interest Rate Appeal.
The Business Standard reported on Wednesday that the Supreme Court of India has admitted the appeal by the banking industry lobby against the order of the National Consumer Dispute Redressal Commission which sought to limit credit card interest rates.
The main Indian credit card issuers are the large private sector banks and foreign multinational banking groups. Regular readers of this blog will know that this story has been followed with considerable interest, and that the argument being put forward by the industry, that it cannot make money unless interest rates of up to 50 percent can be charged has been met on with some suspicion on the part of this blogger.
For a more detailed discussion on the arguments the banking industry lobby is making and what it intends to do should it lose the case see previous post “Indian Credit Card Holders Should Expect Annual Card Fee’s”
The Supreme Court up till now had deferred making a decision, choosing instead to wait for a report from the Reserve Bank of India (RBI), the country’s banking regulator, and who the petitioning banks argue is the authority that should ultimately decide interest rate caps rather than a consumer commission.
The decision to admit the appeal represents a huge victory for the industry lobby who had all all but admitted defeat and had established contingency plans should the apex court have ruled against them.
The NCDRC, had imposed restrictions on banks charging interest rates above 30 per cent, and card issuing banks immediately cried foul claiming that such interest rates caps would mean they could not run their business’s profitability.
A consumer group, Awaz, argued before the court 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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