Udaipur, December 21, 2024 – The Supreme Court has issued a directive rejecting the 30% cap imposed on late credit card payments. A two-Judge Bench of justices Bela M Trivedi and Satish Chandra Sharma delivered this verdict yesterday overturning a 2008 ruling by the National Consumer Disputes Redressal Commission (NCDRC).

NCDRC had put a ceiling of 30% on the maximum interest levied by banks on overdue credit card bills. It had termed high interest rates on payments as unfair trade practice which burdened customers, especially those already in financial problems. This was following a number of complaints at the commission lodged by consumers and NGOs about the high interest rates.

At the time, the NCDRC had said: “There must be some control on such banking and financial institutions with regard to the rate of interest and to protect the consumers.... In a welfare state, the financial institutions cannot be permitted to take advantage of the financial weakness of the consumers and enrich themselves. If this is permitted, the whole purpose of the Consumer Protection Act would be frustrated.”

NCDRC was listening to a petition filed by NGO Awaz Foundation which questioned the charging of interest rates between 36% and 49% per annum on credit card dues and whether it amounted to exploitative practices.

The Supreme Court yesterday reversed the NCDRC decision after listening to petitions against it filed by several banks including Cibibank, HSBC, American Express and the Standard Chartered Bank. Banks will now be able to establish their interest rates on overdue credit card payments within existing rules.

“In view of foregoing reasons, the judgment of the NCDRC is set aside and appeals are allowed,” said Justice Trivedi while delivering the verdict.

With Media Inputs