SC allows pleas against cap on credit card dues

Sub: Eco

Sec: Monetary loss

Context:

Recently the Supreme Court allowed appeals by banks challenging a 2008 order of the National Consumer Disputes Redressal Commission (NCDRC).
The 2008 NCDRC order had declared that charging over 30% interest per annum on credit card dues constituted an unfair trade practice under the Consumer Protection Act.

NCDRC’s Observations (2008):

The NCDRC evaluated whether banks could charge interest rates ranging from 36% to 49% per annum for delays or defaults in credit card payments. It concluded that charging interest rates above 30% per annum is “unfair trade practice”.
The NCDRC ruled that penal interest should be charged only once for a single period of default and should not be capitalized.
The practice of charging interest with monthly rests was also considered an unfair trade practice.

About NCDRC:

It is a quasi-judicial commission set up in 1988 under the Consumer Protection Act of 1986. Its head office is in New Delhi.
The Commission is headed by a sitting or a retired Judge of the Supreme Court or a sitting or retired Chief Justice of the High Court.
The Act mandates the establishment of Consumer Protection Councils at the Centre as well as in each State and District to promote consumer awareness.
The Central Council is headed by the Minister In-charge of the Department of Consumer Affairs in the Central Government, and the State Councils by the Minister In-charge of Consumer Affairs in the State Governments.
It also provides for a 3-tier structure of the National Commission, the State Commissions and the District Commissions for speedy resolution of consumer disputes.