Worried about the exploitation of credit card holders, a parliamentary committee has recommended that the Reserve Bank of India should suggest highest interest rate that can be levied by banks from the card holders.
A report of the Standing Committee on Finance said, “Maximum interest rates to be charged (by banks from credit card customers) may be specified so as not to allow exploitation of customers by banks”. This report was listed in Parliament recently.
The committee did not accept the argument of the Finance Ministry that credit card dues belong to non-priority sector Personal Loans and so, the banks should have the ability to fix the interest rates.
Even the RBI’s circular dealing with numerous aspects associated with Credit Card functioning of banks was useless in dealing with the grievances and complaints of the general public, the committee observed.
The report further said, “The effectiveness of such circulars in bringing down the credit card related complaints is doubtful given the past record”.
The RBI’s circular tells banks to ensure caution while giving credit cards, avoid giving unwanted cards, third party agents for debt collection should not use threats or harassment, among others.
The report said, “The RBI has advised banks to consider issuing cards with photographs of the cardholder/ PIN/ signature laminated cards or any other advanced methods to prevent fraud; it is imperative to see that these are implemented”.