RBI should keep a tab on the interest rates charged by the private non-banking financial companies
Posted on: 15/Nov/2014 12:09:04 PM
A public interest litigation petition was filed by advocate A.R. Jeyarhuthran seeking a direction to quash the May 3, 2012 Reserve Bank of India communication which stated that it was "not regulating the rate of interest being collected by private non-banking financial companies NBFC in the Madras High Court Bench at Madurai on Friday.
Disposing of a public interest litigation petition filed,the First Bench of Chief Justice Sanjay Kishan Kaul and Justice V. Dhanapalan directed the RBI to look into complaints against the NBFCs in a proper perspective.
The court also quashed the RBI’s communication that it did not regulate or fix interest rates to be levied by the NBFCs registered with it, and interest rate would be governed only by the terms and conditions of the loan agreement between borrowers and the companies.
Writing the judgment, the Chief Justice said the RBI should keep a tab on the interest rates charged by the NBFCs since most of the borrowers were uneducated people who took out loans for their personal needs by pledging gold jewels.
