The Indian Banks' Association, Standard Chartered Bank, HSBC and Citibank had appealed the Supreme Court against National Consumer Commission order that directs the banks on not exceeding their interest rates beyond 30% per annum. The appeal has been admitted by the Supreme Court.
However a consumer group, Awaz on whose request the interest rate restriction were forced argued that the banks were charging more than 90% interest on default payments on credit cards along with the hidden costs.
Even the Money Lenders' Act, has set the interest rate for unsecured finance below 20%, said Awaz arguing before the court.
On the other hand the banks feel that they are following the guidelines of the Reserve Bank of India, which is the only body that can regulate interest rates and therefore the commission has no right to pass an order directly to the banks.
Earlier the Supreme Court had refused to put a stay on this directive of national consumer commission. Following this decision, the banks had planned to combine to persuade the court on increasing the cap on interest rate of credit cards.