Supreme Court sets aside consumer redressal panel's order on banks charging exorbitant rate of interest on credit card dues

New Delhi: The Supreme Court on Friday allowed an appeal against the National Consumer Disputes Redressal Commission's 2008 judgment which held banks can't levy interest in excess of 30 % on credit card dues as it would amount to unfair trade practice.

A bench of Justices Bela Trivedi and Satish Chandra Sharma set aside the NCDRC decision, acting on appeals by banks led by HSBC and others.

The apex court had in 2009 stayed the consumer panel's order after the banks contended that prejudice would be caused to them if the order was not suspended.

The banks also claimed that NCDRC did not have the jurisdiction to pass such orders regulating the bank's functioning.

The NCDRC had said the Reserve Bank of India, the banks regulator, failed to regulate this practice by the banks of charging interest rates between 36 % to 49 % on credit card dues.

The NCDRC's judgment had come on a plea by an NGO, Awaz Foundation. The apex consumer panel had observed that the RBI failed to issue specific guidelines capping the interest rates to be charged by banks on credit facilities, including credit cards, resulting into exploitation of consumers.

According to it, in a welfare state, financial institutions should not be permitted to take advantage of consumers' financial weaknesses.