Interest of the credit card: Has a foreign bank increased its interest rate on the outstanding credit card balance from 37.2% to 42%? Responding to this question in parliament last week, State Finance Minister Anurag Thakur said information on the interest rates charged by individual banks on overdue balances on credit cards issued by them does not were not available from the RBI.
“The Reserve Bank of India (RBI) announced that it had deregulated interest rates on advances (including interest rates on credit cards) sanctioned by regular commercial banks (excluding regional rural banks) with effect from 18.10.1994 and the interest rates are determined by the banks with the approval of their respective boards of directors subject to the regulatory guidelines on interest rates on advances contained in the directive General of RBI dated 03.03.2016.
“Information regarding the interest rates charged by individual banks on overdue balances of credit cards issued by them is not available with RBI,” he added.
Thakur’s response came on a question: “If any of the foreign banks increased its interest rate on the outstanding balance from 37.2 to 42 percent on its credit card at a time when the rates of Interest is falling as directed by the RBI by way of lowering rates and, if applicable, the details thereof.
The government was also asked if there was a proposal to bring credit card operations of banks under the control of the RBI.
Thakur said that to protect the interests of credit card holders, the central bank had already advised banks through its main circular dated 01.07.2015. The central bank advised banks to:
- prescribe a ceiling interest rate, including processing and other charges, for credit cards.
- quote annualized percentage rates (APRs) on card products (separately for retail purchases and for cash advances, if different).
- redouble efforts to educate cardholders of the implications of paying only “the minimum amount owed”.