RBI Asks Banks to Make Credit Card Charges 'Reasonable'
Now the bankers didn’t lag behind; they have made their clarifications to the customers by saying that if they don’t pay the credit card dues even after the next billing dates then they have to pay the interest starting from the day of purchase. “The idea is to make it more convenient for customers by granting a few additional days. But if they continue to delay their repayment, they will need to pay interest,” said another banker familiar with the development.
Most of the banks look unwilling towards to reduce any credit card charges as credit cards are the ones with the highest interest charges that come up to 35 to 47 percent per year. Only few selected customers are charged with interest rate of 24 percent on the credit card dues.
“One should bear in mind that credit card is one of the riskiest forms of lending where delinquency rates are relatively high. Also, it is not an amortizing product in the sense that the principal amount does not decline over time. There are risks of fraud for which banks are often held liable. It is an extremely capital-intensive product and a lot of investment is needed in technology and other areas. So, the pricing is higher than other products,” said a banker in charge of retail lending at a private bank.
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