A group of foreign banks, which have been restrained by a consumer court from charging an interest of more than 30 per cent a year from credit card holders, today said they were free to decide interest rate on credit card dues.

Challenging the consumer court’s judgement in the Supreme Court, foreign lenders said capping of interest rates on credit card payment was contrary to RBI policy that stated that banks were free to determine rates of interest on non-priority-sector personal loans without reference to benchmark prime lending rate and regardless of the size of loan.

The foreign banks which have moved the apex court are Citibank NA, Hongkong Shanghai Banking Corp, Standard Chartered Bank and American Express Bank. The Indian Banks Association, in an intervention application, also said the rate of interest charged by banks was not subject to scrutiny of courts.

National Consumer Disputes Redressal Commission has restrained these banks from charging an interest rate of more than 30 per cent a year from credit card holders who fail to make full payment on the due date.

While admitting the petition, a bench headed by Justice B N Agrawal issued notice on the interim application seeking stay on the order of the consumer court. The bench also allowed intervention application filed by the Indian Banks Association .

According to the petitioners, the Reserve Bank in its circular on July 23, 2008 had said that banks could prescribe their respective ceiling rate of interest in respect of small-value personal loans and this would apply to credit card dues as well.

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