Credit Card Interest: Has a foreign bank increased its interest rate on outstanding Credit Card balance from 37.2 per cent to 42 per cent?
Credit Card Interest: Has a foreign bank increased its interest rate on outstanding Credit Card balance from 37.2 per cent to 42 per cent? Responding to this query in Parliament last week, the Minister of State for Finance, Anurag Thakur, said that information about interest rates charged by individual banks on outstanding balances in credit cards issued by them is not available with RBI.
“The Reserve Bank of India (RBI) has informed that it has deregulated the interest rates on advances (including interest rates on credit card dues) sanctioned by Scheduled Commercial Banks (excluding Regional Rural Banks) with effect from 18.10.1994 and the interest rates are determined by banks with the approval of their respective Boards of Directors subject to regulatory guidelines on interest rate on advances contained in RBI’s Master Direction dated 03.03.2016.”
“Information with regard to interest rates charged by individual banks on outstanding balances in credit cards issued by them is not available with RBI,” he added.
Thakur’s reply came on a question: “whether one of the foreign banks has increased its interest rate on outstanding balance from 37.2 to 42 per cent in their credit card at a time when the interest rates are going down following the directives of the RBI by way of rate cut and if so, the details thereof.”
The government was also asked on whether there was a proposal to bring credit card operations of banks under control of the RBI monitoring.
Thakur said that to protect the interest of credit card holders, the central bank had already advised banks through its Master Circular dated 01.07.2015. The central bank has advised banks to:
- prescribe a ceiling rate of interest, including processing and other charges, in respect of credit cards.
- quote Annualized Percentage Rates (APR) on card products (separately for retail purchase and for cash advance, if different).
- step up efforts on educating the cardholders of the implications of paying only ‘the minimum amount due’.