According to the foreign banks, the commission had failed to appreciate that the market in India was still at a developing stage and the risk of default was relatively high. “An emerging market like India also has a high cost of acquisition and a high cost of servicing an account as compared with other mature markets,” it said.

“The commission has no jurisdiction to hold that the charging by banks of interest at monthly rates was an unfair trade practice given that credit card dues are unsecured and of indeterminate tenure, and the levying of interest at monthly rates is in any event harmonious with the monthly billing and payment cycles,” Citibank said.

WHAT DO THEY SAY?

•Capping of interest rates on credit card payment is contrary to RBI policy that states that banks are free to determine rates of interest on non-priority sector personal loans

• An emerging market like India also has a high cost of acquisition and a high cost of servicing an account as compared with other mature markets