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The Indian Supreme Court has accepted an appeal from Indian banks seeking to nullify a government commission order barring banks from assessing credit card annual percentage interest rates that exceed 30%. The Indian Banks Association, Standard Chartered Bank India, HSBC India and Citibank India contend the National Consumer Disputes Redressal Commission has no jurisdiction to cap card interest rates. The banks say they follow regulations from the Reserve Bank of India. "If an order is passed by the Supreme Court on not exceeding a 30% limit, consumers will be lot more relaxed on paying back credit card balances, but banks will see a slight dip in operating income and, therefore, might resort to other income-generating products," Prathima Rajan, an analyst from United States-based research company Celent LLC, tells CardLine Global. Indian credit card fees and interest rates vary from bank to bank, but most fall between 30% and 51%, Rajan says. For example, most banks charge between 26% to 46% for cash advances. "But banks often have justified higher interest rates on credit cards, claiming higher risk of default," Rajan says. "The default rate on credit cards in India is 6% to 8%."
