(MENAFN- KNN India)
New Delhi, Dec 27 (KNN) The Supreme Court of India has delivered a landmark judgment affirming banks' authority to levy interest rates exceeding 30 percent on credit card dues, effectively overturning a 2008 National Consumer Disputes Redressal Commission (NCDRC) verdict that had classified such charges as unfair trade practice.
In their ruling, Justices Bela M Trivedi and Satish Chandra Sharma declared the NCDRC's previous decision "illegal," stating it improperly interfered with the Reserve bank of India's delegated powers under the banking Regulation Act, 1949.
The court emphasised that banks had not engaged in deceptive practices, as credit card holders were adequately informed about their privileges, obligations, and penalty structures.
The judgment, issued on December 20, strongly supported the RBI's position that it could not be directed to impose interest rate caps on the banking sector, either collectively or individually, as this would contradict existing banking regulations.
The Supreme Court clarified that while the NCDRC had the authority to invalidate unfair contracts, interest rates set by banks under RBI guidelines and properly communicated to cardholders could not be deemed unconscionable.
The case originated from appeals by major international banks including Citibank, American Express, HSBC, and Standard Chartered Bank, challenging the NCDRC's 2008 ruling that had deemed annual interest rates between 36 and 49 percent excessive and exploitative.
The Supreme Court noted that customers explicitly agreed to the banks' stipulated terms when obtaining credit cards, with all key conditions, including interest rates, clearly disclosed.
The court's decision highlighted that no evidence existed to suggest banks had acted contrary to RBI policy directives. Notably, the judgment mentioned that the affected party had never approached the RBI, the statutory authority, with concerns about interest rates or the high benchmark prime lending rate.
This ruling effectively reinforces the banking sector's discretionary power in setting credit card interest rates while emphasising the importance of transparent communication of terms and conditions to customers.
It also reaffirms the RBI's regulatory authority in banking matters and the limitations of consumer forums in modifying mutually agreed contractual terms between banks and credit card holders.
(KNN Bureau)
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