Now, while we are on the subject of interest rates levied by credit cards, let's discuss a related issue. Have you ever wondered if there is an upper limit to the interest rates charged by credit cards, as in does it have any regulator like a Benchmark Prime Lending Rate (BPLR) quoted by the RBI for interest rates on loans? The answer is a no.
However, there seems to have been a bit of unrest over rising credit card interests, especially in the case of defaults. A consumer group by the name of Awaaz had moved the National Consumer Commission last year over the rising interest rates that sometimes touched 90 per cent for defaulters including hidden costs.
The consumer group's argument centered around the fact that there was no check on the rising interest rates levied by the banks on credit card users and defaulters. RBI's policy states that banks are free to exercise their right in determining interest rates that fall under the category of non-priority sector personal loans, regardless of the size, without referring to the benchmark prime lending rate (BPLR).
Image: Dmitry Nikolin, executive director of Eurasian Bank, shows a new VISA card encrusted with a 0.02 carat diamond and laced with an elaborate gold pattern in Almaty. | Photograph: Shamil Zhumatov/Reuters
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