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Consumer panel: More than 30 pc on credit cards unfair.........Satya Prakash New Delhi
BANKS CANNOT charge interest at rates in excess of 30 per cent per annum from credit cardf holders for the customers' failure to make full payment on due date or paying the minimum amount due from them.
Terming it as "exorbitant", the national consumer court on Monday said it was an "unfair trade practice". The National Consumer Disputes Redressal Commission ordered the banks not to indulge in such practices or repeat them. "Penal interest can be charged only once for one period of default and shall not be capitalised," the commission said. "Charging of ‘interest with monthly rests' is also an unfair trade practice," it added. However, the commission clarified that the direction not to charge interest in excess of a specific rate would not be applicable to past transactions. The order came on a consumer interest litigation filed by Gujaratbased NGOs ‘ waz' and ‘Jagrut Na A grik' challenging the practice of banks charging interest rates ranging from 36 per cent to 49 per cent per annum from credit card customers for delay or default in payment. "In our view, prima facie, charging of interest at rates ranging from 36 per cent to 49 per cent per annum is exorbitant and amounts to exploitation of the borrowers/debtors and is usurious," the commission said. Starting June 1, ICICI Bank has revised the monthly finance charges on its credit cards - 3.4 per cent on blue silver and gold cards and 3.15 per cent on platinum card. ABN AMRO is charging 3.5 per cent as fi nance charge on all cards. Citibank, HSBC and Standard Chartered are also charging similar rates. At an interest rate of 3.5 per cent per month, a credit card customer ends up paying up at compounding annual rate of 51 per cent against 42.5 per cent that he used to pay annually at 3 per cent per month. After analysing the lending rates of banks for the advances for the quarter ending 2008, the Commission noted that average rate of interest on any kind of loan was upto 15 per cent per annum. "Even if we add additional 15 per cent per annum as additional costs for recovering the amount from the credit card holders, then also the rate of interest cannot ex ceed 30 per cent," the apex con sumer court said. URL: http://epaper.hindustantimes.com/artMailDisp.aspx?article=08_07_2008_011_008&typ=0&pub=264 |
