Credit card holders have been facing quite some hassle regarding the high interest rates charged by credit card companies. On this issue, a parliamentary committee has come with a suggestion to the RBI that a ceiling should be put on the maximum interest rate a bank can charge on credit cards to its customers.
"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," a report of the Standing Committee on Finance said.
The Finance Ministry had defended the existing mechanism of charging interest rates adopted by banks saying that credit card dues are unsecured personal loans of non priority sector and the banks should be free to decide the interest rates on them.
The committee however disagreed to the FinMin's stance.
It has further noted that the circular by RBI regarding several aspects of credit card operations has not been of much benefit to customers.
"The effectiveness of such circulars in bringing down the credit card related complaints is doubtful given the past record," the report of the committee 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," it added.