SC lifts 30% interest cap on late payment of credit card bills

In a relief to banks, the Supreme Court on Friday set aside an order of the National Consumer Disputes Redressal Commission (NCDRC) that capped credit card interest rates at 30 per cent per annum on late bill payments.

- BHAVINI MISHRA

The top court ruling has put an end to a 16-year-old case.

A Bench of Justices Bela Trivedi and Satish Chandra Sharma was hearing petitions by banks such as Standard Chartered Bank, Citibank, American Express, and Hong Kong and Shanghai Banking Corporation (HSBC), which questioned before the court whether the NCDRC had jurisdiction to fix a maximum ceiling on interest rates to be charged by the lenders from their credit-card holders for their failure to make payment on the due date.

The detailed judgment was awaited until the time of going to press.

In 2008, the NCDRC had ruled that charging credit-card holders interest rates in excess of 30 per cent per annum for failing to make the full payment on time, or only paying the minimum amount due, was an unfair trade practice.

However, banks argued the advising interest rate is an occupied statutory field reserved by the legislature for the Reserve Bank of India (RBI) to regulate, which is being done by the central bank.