Case of National Consumer Disputes Redressal Commission, October 24, 2007 (case 1. Awaz and Ors., 2. DCM Financial Services Ltd. Vs 1. Reserve Bank of India and Ors., 2. Mukesh Rajput and Anr.)
| President | M.B. Shah, J. (President), Rajyalakshmi Rao and Anupam Dasgupta, Members |
| Resolution Date | October 24, 2007 |
Order:
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Various States have enacted laws controlling charging of exorbitant rate of interest by the money-lenders. But, it is apparent that there is no restriction with regard to charging of usurious rate of interest by the Banks or Non-banking financial institutions in their money lending activity. There is also challenge to various unjustified demands such as Processing Fee, etc., and the principle of DAMDUPAT is not made applicable. Hence, complaint is filed before this Commission under the Consumer Protection Act, so as to protect the consumers from unjustified exploitation of their needs.
CONSUMER COMPLAINT NO. 51 OF 2007
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This complaint is filed by Registered Trust, namely, 'Awaz' and consumer organization, viz., 'Jagrut Nagrik' and one Pradeep Kumar Thakur, against the (i) Reserve Bank of India (RBI), (ii) HSBC, (iii) American Express Bank Ltd., (iv) Citibank and (v) Standard Chartered Bank (Credit Card Division) contending that various commercial banks are indulging in unfair trade practice by charging usurious interest on the loans advanced by the Banks as well as on the amounts payable under credit cards.
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It is pointed out that:
(i) on credit cards, the banks are charging interest roughly at the rate of 36% per annum;
(ii) they are charging various financial charges, such as, late payment fee of Rs. 200/- to Rs. 500/- despite the decision of the Apex Court that penal interest cannot be capitalized and no interest can be charged on penalty;
(iii) the banks are charging transaction fee of 2.5% for cash advance against credit card, ATM, etc. - this is over and above the interest at the rate of 2.95% per month on credit facility; and
(iv) late fee of 30% of the minimum due is being charged up to Rs. 500/- per month, if the credit card bill is not paid by the due date.
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Various other aspects are pointed out and a prayer is made that the banks may be restrained permanently from charging excessive rate of interest and service charges de hors ceiling prescribed under the RBI guidelines/circulars. Prayer is made for refund of the excessive interest charged on the credit cards by the respondent commercial banks.
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When the Notice was issued, learned Counsel appearing on behalf of RBI, after obtaining instructions, submitted that the RBI had not issued any guidelines restricting the banks from charging any given rate of interest. Further, in the affidavit dated 3.10.2007, it has been stated that -
Further, it may be emphasized that...
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