Thu Dec 26 13:30:07 UTC 2024: ## Supreme Court Overturns Ruling Limiting Credit Card Interest Rates

**NEW DELHI** – The Supreme Court of India has overturned a 16-year-old ruling that capped credit card interest rates at 30%, effectively allowing banks to charge significantly higher rates. The court ruled that the National Consumer Disputes Redressal Commission (NCDRC) lacked the authority to interfere with the Reserve Bank of India’s (RBI) power to regulate interest rates.

The 2008 NCDRC verdict had deemed interest rates exceeding 30% per annum as an unfair trade practice. However, the Supreme Court found this decision to be illegal, stating it contradicted the Banking Regulation Act of 1949 and infringed on the RBI’s regulatory mandate.

The court argued that banks did not engage in deceptive practices, as credit card holders are informed of terms and conditions, including interest rates, before accepting the credit card. The justices emphasized that the NCDRC had no jurisdiction to alter mutually agreed-upon contract terms between banks and customers.

The Supreme Court’s decision comes as a victory for major banks including Citibank, American Express, HSBC, and Standard Chartered, who had appealed the NCDRC’s ruling. The court highlighted the absence of evidence suggesting banks acted against RBI directives and noted that the aggrieved party in the original case had not even contacted the RBI to express concerns about the interest rates.

This ruling removes a significant constraint on credit card interest rates, potentially leading to higher borrowing costs for consumers. The decision underscores the court’s deference to the RBI’s authority in setting banking regulations.

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