AWAZ Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) VARIOUS States have enacted laws controlling charging of exorbitant rate of interest by the money-lenders. But, it is apparent that there is no restriction with regard to charging of usurious rate of interest by the Banks or Non-banking financial institutions in their money lending activity. There is also challenge to various unjustified demands such as Processing Fee, etc., and the principle of DAMDUPAT is not made applicable. Hence, complaint is filed before this Commission under the Consumer Protection Act, so as to protect the consumers from unjustified exploitation of their needs.

(2.) THIS complaint is filed by Registered Trust, namely, "Awaz" and consumer organization, viz., "Jagrut Nagrik" and one Pradeep Kumar Thakur, against the (i) Reserve Bank of India (RBI), (ii) HSBC, (iii) American Express Bank Ltd., (iv) Citibank and (v) Standard Chartered Bank (Credit Card Division) contending that various commercial banks are indulging in unfair trade practice by charging usurious interest on the loans advanced by the Banks as well as on the amounts payable under credit cards. It is pointed out that :

(3.) WHEN this Revision Petition came up for hearing, it was contended on behalf of the petitioner, DCM Financial Services Ltd., that the petitioner was charging interest at the rate of 3% per month. In that Revision Petition, we had issued Notice to the Central Government. In response to the Notice, on 7.12.2006, Sr.Advocate, Mr.R.V. Sinha, on behalf of the Union of India submitted that the RBI had to control the rate of interest charged by the non-banking financial institutions and, at present, no maximum limit for interest had been fixed by the RBI and hence the interest is recovered by non-banking financial institutions on the basis of contract. In view of the aforesaid submission, in our order dated 7.12.2006, we observed as under: