The Reserve Bank of India on June 9 sent a notice to the country’s banks directing them to set a ceiling on the interest rates and on the processing and other charges they apply to small-value loans, including credit cards.
Because banks often set different rates based on the payment or default history of the cardholder, they should make their rates more obvious to consumers, the central bank said. It also asked banks to publicize through their websites and other means the interest rates charged to various categories of customers.
Banks also must indicate upfront to the credit cardholder how finance charges are calculated using illustrative examples, the notification said.
A central bank spokesperson declined to comment on the notice, saying only that the Reserve Bank issued it after receiving repeated consumer complaints that banks were increasing credit card rates haphazardly.