Supreme Court Removes 30% Cap on Credit Card Interest Rates, Affects Millions of Users

In a landmark decision on Friday, the Supreme Court of India removed the 30% cap on interest rates charged by banks on delayed credit card repayments. The ruling is expected to significantly impact millions of credit card users across the country.

A bench of Justices Bela M. Trivedi and Satish Chandra Sharma delivered the verdict, allowing a group of petitions filed by several banks that had challenged a 2008 ruling by the National Consumer Disputes Redressal Commission (NCDRC). The NCDRC had imposed a cap on the maximum interest rate banks could charge at 30%, citing consumer protection concerns.

Among the petitioners were prominent financial institutions, including Standard Chartered Bank, Citibank, American Express, and HSBC, which argued that the NCDRC’s decision was overly restrictive and adversely impacted their business models.

In 2008, the NCDRC had imposed a cap on credit card interest rates, stating that the interest rate could not exceed 30%. The ruling came after complaints from individuals and non-governmental organizations (NGOs) about the excessive interest rates, sometimes reaching as high as 49%. The NCDRC had also criticized the government and the Reserve Bank of India (RBI) for not regulating the high charges effectively.

The removal of the cap by the Supreme Court means that banks and non-banking financial companies (NBFCs) now have the flexibility to charge higher interest rates on outstanding credit card dues. While this decision benefits the banking sector, it is expected to inconvenience millions of cardholders, especially those struggling with debt repayments.

As of now, the official verdict has not been uploaded on the Supreme Court’s website, leaving many to speculate on the broader implications of this significant judgment.
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