Relief was announced today by the Reserve Bank Governor Shaktikanta Das for the credit card holders. If you also use a credit card, then you must have experienced that heavy penalty and interest are charged for not paying on time.
The interest rate charged on credit cards ranges from 40-45 percent on an annual basis. Announcing the RBI MPC today, Governor Das said that the penalty and interest charged on loans or credit cards cannot become a source of profit for them. The Reserve Bank is working in this direction and very soon it will fix the penalty rule on loans and credit cards.
Transparency is necessary regarding penalty and interest rate
Giving information about the decisions taken in the RBI MPC meeting, it was said that there is a need for transparency and proper guidelines regarding the penalty and interest rate on loans and credit cards. At present, each credit card issuing entity decides on its own interest and penalty. At present, there is no such guideline on the basis of which the decision regarding penalty and interest should be taken.
SBI Card charges monthly interest up to 3.5%
For example, SBI card charges up to 3-3.5% interest on payment after the due date. If the minimum amount is not deposited till the due date, then the hefty amount is also recovered as a penalty. At present, interest is calculated from the transaction date if the full payment is not made on the due date. However, later after the instructions of RBI, its calculation is being done from the due date of payment. Despite this, there is still no uniformity in this regard.
The Reserve Bank will first prepare a draft related to the guidelines. After this, it will be discussed together with different stake holders like banks, multiple entities and borrowers and then the final guideline will be issued. When the final guideline will be issued by RBI in this regard, it will be applicable to all banks, NBFCs and other financial entities.
Additional interest up to 1-2% per month
Apart from credit cards, charges on various types of financial transactions including loan EMI, check bounce will be included in the purview of RBI guidelines. The aim of the Reserve Bank is to bring transparency and uniformity regarding all types of charges. At present, a penalty of up to 1-2 per cent is imposed every month for not paying the EMI on the loan on time. Apart from this, late fee charge is also charged separately. The rules for each entity are different.